'A wicked, perfect storm': Govt slashes petrol taxes to tackle soaring prices

Kiwi motorists will get some relief from soaring petrol prices, with the Government slashing fuel excise duties and road user charges by 25c a litre each from midnight.

But one major fuel company has jumped the gun, announcing it will impose the price reduction immediately.

Mobil said it would not wait until midnight, instead reducing prices across all petrol grades by the same amount straight away.

Mobil lead country manager Andrew McNaught said the company wanted to give "some immediate relief" to motorists as they drove home tonight.

"The cost of living has been having a significant impact on many households, and we want to do our part to help reduce those impacts, which is why we are dropping our prices immediately," he said.

Prime Minister Jacinda Ardern described the current situation as a "global energy crisis" after Russia's invasion of Ukraine.

Cabinet had decided today to reduce fuel excise duties and road user charges by 25c a litre each, for the next three months. The change takes effect from 11.59pm tonight.

"All public transport fares will be half-price for the next three months," Ardern added.

The half-price public transport fares should come into effect on April 1.

"We are in a wicked perfect storm," Ardern told reporters.

"We expect continued volatility, and this affects everything."

However the Government says it is "too complicated" to remove GST from fuel prices.

Finance Minister Grant Robertson said tinkering with GST would be increasingly complicated.

"It's a massive administrative job to play with GST."

Ardern said the changes announced today were quickly achievable.

This year's Budget in May would address longer-term issues around energy independence and a move away from fossil fuels.

Robertson said Cabinet wanted to support people through the global energy shock.

Fuel price changes 'within hours'

The reduction in fuel excise duties would take effect from 11.59pm tonight.

"We cannot influence the global oil price," he added, but local fuel excises could be amended.

"It means that we can take this action within hours," Robertson said.

"For most taxes, it ordinarily took months to affect any change."

The Russian invasion added to existing global inflationary pressures, Robertson said.

"On road user charges, it is a more complex picture."

Reduced public transport fares should help cushion the blow some families faced from surging living costs, he said.

A vast array of different road user charges complicated attempts to make changes in that area.

Fuel excises went directly into a transport fund which was "always well over-subscribed" due to decades of underinvestment in roads and related infrastructure.

Robertson said today's fuel excise cuts and transport subsidies were affordable.

The Treasury estimated the reduced fuel excises would cost about $350 million.

Money would be reprioritised from a Covid-19 fund to make up the shortfall.

The wind-down of managed isolation facilities had freed up some public money.

Energy and Resources Minister Megan Woods said she spoke with fuel company chief executives today, and most were willing to take steps to reduce prices for consumers from tonight.

Fuel industry profits would be monitored, and data made publicly available.

"There are options to pursue more data disclosure," she added.

Woods said she was working with other energy ministers worldwide to monitor the energy crisis and take possible remedial action.

PM: No magic bullet on global fuel prices

Ardern said no magic solution existed, but just as the Government faced the Covid-19 challenge, it would now tackle the energy crisis.

She said new measures would be activated from April 1 to lift the income of more than 300,00 families by $20 a week.

On May 1, more than 1 million people would receive the winter energy payment.

Ardern said the main focus was how to give people more energy security over the long-term.

Making public transport more affordable was a key component of this, the Prime Minister said.

The ministers said almost 60 per cent of families would get an increase to Working for Families of on average $20 a week.

Superannuation would increase $52 per fortnight for a single person and $80 for a couple, and benefits would increase up to a further $35 a week.

The winter energy payment from May would provide $31.82 a week for couples and people with dependent children, for a total of about $700 over winter.

Earlier today

Earlier today, Ardern finally acknowledged a major cost of living problem and indicated the Government could announce immediate tax relief at the petrol pump.

Russia's invasion of Ukraine has driven some of the jump in petrol prices, but local fuel taxes are a major topic of debate now.

The cost of a litre of petrol has surged past $3.

For each litre, about 70c went to Waka Kotahi NZ Transport Agency to pay for maintaining roads, building new roads and subsidising public transport.

Apart from 70.024 cents going to the National Land Transport Fund, 6c went to the ACC Motor Vehicle Account, and a total of 1.26c went to a local authority's fuel tax and petroleum or engine fuels monitoring levy.

Aucklanders pay an additional regional fuel tax.

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter