'It's costing you too much just to live': Warning petrol prices could stay high for years

The Government has indicated the fuel tax cut will be eased out gradually to avoid more price...
The Government has indicated the fuel tax cut will be eased out gradually to avoid more price spikes. Photo: RNZ
A pricing expert says it's possible petrol could stay at the $3 per litre mark for the next few years, with motorists currently facing "a perfect storm" of different pressures.

Last week the European Union announced further sanctions on Russia, putting increased pressure on the supply of oil.

The Government's 25 cent fuel tax cut which was introduced on March 15 to address living costs is also due to expire in just over a month.

Principal policy advisor at AA Insurance Terry Collins said the war in Ukraine, pressure on supply, and the coronavirus pandemic were all contributing to rising costs.

"This is a perfect storm we're in, with the sanctions, the demand increasing, and the supply is static," he said.

"Will it get to $4 a litre? I can't guarantee that. But maybe sometime in the future - when that is, it's very hard to predict."

It was likely prices would consistently sit at about $3 a litre for the next few years, he said.

But he said overall fuel use would probably remain the same - when the price of fuel rose by 10 percent, it only made a 1.5 percent difference in consumption.

"People don't have a lot of discretionary ability to change their behaviour and use less fuel just based on price."

The Government has indicated the fuel tax cut will be eased out gradually to avoid more price spikes.

In Christchurch, drivers at the pump were starting to look for other options as prices inched back up.

One woman said her family wouldn't be able to afford to drive for much longer.

"We're looking at alternatives, possibly [my husband] getting a motorbike so that it's actually most cost effective for him to use that, but with winter coming and the Christchurch weather so unpredictable, health-wise, I don't think it's a good idea."

She was frustrated people were being told to get out and support the local economy when they couldn't afford basic living costs.

"You basically can't support the local economy because it's costing you too much just to live."

A mother of two said she had never been able to drive to different regions because of the cost, and had never had a full tank of petrol.

"I've never spent more than $50. I've never pressed the fill button, ever."

She only drove to take her children out and get groceries, but she said when petrol prices first spiked, even that was beyond the budget.

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