Fuelling more cost-of-living misery

Welcome to July. Welcome to winter. And welcome back to reality when it comes to the true cost of getting from A to B.

Six months gone and six months to go. Halfway through another year. As we literally and metaphorically rip off the months marked "June" on our calendars and smartphones respectively, we are now only 15 weeks from the next general election.

This morning will be like a short, sharp shock, an icy, cold wash from a barrel of water outside in the garden on a frosty morning. Low snow is predicted to settle in across the South as the day goes on, signalling the much-delayed start to winter and sending fingers towards the heater switches.

As you get out of bed this morning, and brush the frost off your duvet, is there something else, other than the weather, that’s bugging you? Did you forget something important, another job to cross off your list?

It may well be that you meant yesterday, or earlier in the week, to fill up your car ahead of the 29c-a-litre (including GST) hike in petrol prices, which happened a few hours ago. If you forgot, the good news is there is still fuel in the pumps today. Unfortunately, the bad news is your household budget has overnight become even more difficult to manage.

Also at midnight, the Government’s subsidising of road-user charges for diesel-vehicle owners ended, as did half-price fares on public transport, possibly the best thing to happen in that sector for many years in terms of encouraging the greater use of buses and, in the North Island, trains.

It was great while it lasted, of course. New Zealanders have been living a kind of Alice in Wonderland existence, enjoying a false reality of lower fuel costs and cut-price bus fares, and forgetting there is a real world just beyond the bubble.

Cold shivers at the petrol pump. PHOTO: SUPPLIED
Cold shivers at the petrol pump. PHOTO: SUPPLIED
It seems hard to believe the subsidies were in place for more than a year. The Government cut fuel taxes by 25c-a-litre in March 2022, a few weeks after Russia began its illegal war against Ukraine, and kept them going as part of its cost-of-living relief package.

Fuel prices went berserk soon after the Russian invasion and, even with the subsidy, reached well above $3-a-litre for 91-octane petrol in some parts of the country in May last year. This week, until this morning anyway, 91 petrol has been averaging about $2.35, with 95 petrol about 20c-per-litre more expensive, according to the Gaspy website.

The trouble is, when you take something away to make things artificially better, there’s a good chance you are going to have to add that back on at some stage. Arguably, doing that just three months or so before an election is not such a wise move if you’re looking to pick up more votes.

However, Kiwis cannot say the Government failed to help them out when their wallets were being squeezed. Neither can they pretend they didn’t know it would come to an end one day.

Automobile Association Otago chairman Malcolm Budd made a very good point this week when he suggested it might have been better to remove the subsidy in a staggered way, to allow people to get used to gradually higher prices.

Have we seen the last of $3-plus per litre petrol? University of Otago economics department senior lecturer Dr Murat Ungor is optimistic prices will behave themselves and remain below that threshold, with global oil reserves more stable than this time last year.

New Zealanders fuelling up at the pumps this week have been asked by journalists how the rise in prices is going to affect their households. Some have said they will be walking more to save money and won’t be relying on their vehicles as much. Will that provide the impetus for more people to hop on public transport?

As New Zealand looks to decrease its reliance on fossil fuels and adopt more sustainable forms of energy and transport, perhaps we need to take on board the high price of petrol as a signal for us to change our travel behaviour?