The tumbling New Zealand dollar is being matched by a drop in the price of oil, meaning pump prices are staying about where they are - for now.
Oil has dropped to its lowest price in five months with the price of a barrel of Brent crude down from US$128 in early March to a low of US$110 on Tuesday as global jitters and sagging demand weigh on all commodity prices.
At the same time - and due largely to the same factors - the New Zealand dollar has come off its strong run against the greenback, yesterday falling as low as US76.48c, a 4-month low.
Mike Bennetts of Z Energy said there was much more pressure to push oil prices down rather than up at the moment.
"If you look at the broader economic environment right now it's particularly bearish. Greece is not sorting things out and you've got a change of government in France," he said.
The market was well aware of a programme by Japan to buy oil as power station fuel to replace nuclear generation.
The looming European embargo on Iranian oil had also been priced in.
Summer driving in the United States usually increased sales of petrol but Bennetts said this had been largely cancelled out by higher sales of more fuel-efficient vehicles cutting demand between 4 per cent and 7 per cent on the same time last year.
Figures out yesterday show US crude inventories are at a 22-year high amid weak demand and growing production.
In Sydney, Barratts Bulletin analyst Jonathan Barratt said the market would remain weak for the next month until there was clarity over the European crisis.
Consumption figures compiled by Z Energy show fuel sales in New Zealand are down 3 per cent for petrol and up 2 per cent for diesel on last year.
Petrol sales were at their lowest for eight years due to high prices and more economical cars, Bennetts said.
Competition between petrol companies had intensified with BP and Caltex's Smart Fuel card scheme and more aggressive supermarket fuel discounts of up to 30c a litre.
Bennetts said that in spite of this petrol companies had clawed back margins in the past two months.
Z was now at the upper end of the roughly 2.1c-a-litre margin it had averaged during the past two years.
Spokesman for AA PetrolWatch Mark Stockdale said monitoring of fuel company importer margins - the difference between retail prices and costs - showed they are above the level at which we would normally see a drop in retail prices.
There was room for them to drop 6c a litre from $2.20 for 91 octane petrol even allowing for the dollar's fall.
"The good news is we are seeing a fall in [oil] commodity prices, the bad news is that it hasn't been passed on at the pump," Stockdale said.
He said the fall in crude prices was a blip in what was an upward trend in the price of increasingly scarce oil over the long term.
PUMP PRICE MATHS
* Z Energy says if crude moves by US$1 a barrel the pump price in NZ generally moves by a cent a litre.
* The effect of the falling NZ dollar has been cancelled out by falling oil prices.
This story has been corrected from an earlier version. Mike Bennetts of Z Energy said there was much more pressure to push oil prices down rather than up at the moment, not the other way around as first printed.