Fuel prices: the only way may be up

There is a very good chance the petrol motorists buy this week is as cheap as it will ever be.

Petrol prices in the big urban centres have passed the $2-a-litre mark after Shell was first to put its price up 3c a litre.

The cheapest, 91 octane, cost $1.95.9 a litre and 95 octane climbed to $2.02.9 a litre. Diesel rose 4c to $1.32.9 a litre.

Petrol was 22c a litre more expensive in the main centres than it was in August as motorists paid at least $2 a litre for 95 octane for the first time since 2008.

Prices yesterday varied outside the main centres: in the South, motorists paid $2.15 a litre for 95 octane petrol in Queenstown and $2.09.9 in Omarama.

Automobile Association petrol price analyst Mark Stockdale yesterday said prices appeared more likely to go up than down in a gradual climb in the new year.

Economic growth in India and Asia could put more pressure on oil prices, so a gradual $US10 ($NZ13.38)-a-barrel increase could occur over next year.

Analysts suggested that would push oil prices to somewhere near $US100 a barrel to add about 10c a litre to the price of petrol.

Motorists would have to hope the exchange rate would take the sting out of the price rise or get the Government to review the fuel tax.

"The market is working well - that was established in the review in 2008 - and the price increases we're seeing reflect the real cost of fuel," Mr Stockdale said.

"But tax increases added 10c a litre to petrol this year. If they'd just remove the inequity of having GST on top of the excise tax, then that'd cut prices by 7c a litre."

Ian Twomey, of energy analyst Hale and Twomey, said oil prices might stabilise as the markets waited for indications of new demand.

That might mean a Christmas-time breather, but prices were tipped to climb to near US$100 a barrel through 2011, Mr Twomey said.

Whatever the case, Mr Twomey did not expect the sort of oil-price spike that pushed petrol prices to $US140 in 2008, when the global economy had yet to tip into recession.

Green Party transport spokesman Gareth Hughes said the latest increases, and threat of more, showed the Government needed to plan for a future of high oil prices.

In response to written questions from the party, Transport Minister Steven Joyce said the Government had not undertaken any studies on the impact of high fuel prices on travel behaviour.

Mr Hughes said New Zealanders switched to public transport when the petrol price breached $2, and the Government needed to invest in public transport.

Mr Stockdale said the AA noted people changed their travel behaviour during 2008, but that prices then had spiked quickly and so were difficult to budget for.

The latest, gradual increases might encourage people to drive more economically, but they may be easier to plan for.

 

- stu.oldham@odt.co.nz

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