Govt considers move to hold fuel prices

The Government is considering delaying introduction of part of its emissions trading scheme that would have added 6c to 8c more to the cost of a litre of petrol from next January.

It is understood mounting pressure over rising fuel, food and mortgage costs in an election year is prompting thoughts of postponing the fuel price rise.

National has indicated it is worried about the combined impact on fuel prices of new measures involving biofuels, the emissions trading scheme and regional fuel taxes.

Leader John Key says the moves could add 25c a litre to petrol prices next year.

It appears the Government is also closely monitoring the situation, and as political support for the emissions trading scheme begins to waver, ministers may be forced to make concessions.

Yesterday, Climate Change Minister David Parker said there were no plans to delay the overall scheme.

But Labour needs votes in Parliament to get it passed. New Zealand First has guaranteed its support only for the legislation's first reading, and is likely to demand compensation for consumers in return for any further support.

Delaying the introduction of a further rise in fuel prices could be a political positive for Labour.

National finance spokesman Bill English yesterday said his party still supported an emissions trading system as the best way of dealing with climate change.

But the scheme needed to be workable, and there had to be a fair distribution of costs.

Mr English said National was ‘‘genuinely engaged'' in the select committee to get a system that worked.

Asked if the party was considering delaying the overall scheme or only the fuel-related parts of it, he said no decisions had been made.

Public concern about the costs of the scheme had got ahead of concern about whether the world was going to be warmer in 100 years, he said.

The Government's Biofuels Bill, which would require oil companies to sell a small but increasing amount of biofuel, is floundering in a select committee as international concern about the new fuel grows. 

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