Petrol and diesel prices are likely to increase again, but probably not as dramatically as earlier in the year, the Automobile Association (AA) says.
Crude oil prices have jumped due to renewed conflict in the Middle East, this week climbing back above $US80 ($NZ137) a barrel.
Gaspy data showed retail fuel prices were still down on Thursday, with an average national price for 91 petrol of $2.88 per litre, down 5.5% over 28 days.
AA spokesperson Terry Collins said there was "always a lag" between movements in oil prices and the retail prices that New Zealanders would pay at the pump.
"It's a replacement cost," he said. "If they've bought their fuel and it's on the water, they would have bought it at a cheaper price."
"Then they wait another month for the next order, or whatever time-frame it is, and that's when the price will be going up."
"The oil companies work on a replacement-cost policy," Collins said. "So if you've got $100,000 worth of fuel sitting in your tank, and you know that the next one's going to cost you $120,000, you sell that for $120,000, so you've got the money to pay for [the next one]."
He said pump prices would increase - it was just a matter of when.
"It's not going to be the same degree as when the conflict first started because when the conflict first started, nobody knew it was coming and so there was hundreds of tankers caught in the Persian Gulf.
"I looked on my data tracking yesterday, there was 45 tankers. Okay, some of them could have gone dark. But 45 is 1.5% of the global fleet. That means the other 98.5% can go somewhere else. They don't need to go through the Strait of Hormuz."
Collins said he was more concerned about diesel.
"The effectiveness of the Ukrainian attacks on the Russian infrastructure has meant that [the Russians] have banned the export of diesel. Now, they generally don't sell to Europe or the US or whatever, but China and India... But if they can't get diesel themselves, they've got to go to other markets to get it, which could be in the Asian area, which is where we get our product from."
He said the price of a barrel of diesel was currently much more expensive than it normally would be in comparison to a barrel of oil.
"That was what characterised the big jumps at the beginning of the conflict... What we saw then was a complete disassociation between the retail price and the price of a barrel of oil. So that's a worry now for what comes next."
The difference was not likely to be as large this time, he said, but was still a concern because the demand for diesel was inelastic compared to demand for petrol.
Whereas many people could opt for public transport instead of driving, diesel had to be used by trucks, boats and farming machinery.
Collins predicted motorists would probably see slow prices increases from here.
"I've said to people, beginning of the month was great, this week's good, next week could be a bit worse than that... Put it this way: after work tonight, I'm filling up."
This story was first published on rnz.co.nz |  |
