Energy Minister Judith Collins and officials investigating whether consumers are being ripped off at the petrol pump have some new calculations do after the latest oil price slump.

The fresh plunge in the prices began last Thursday when the price of US benchmark (West Texas Crude) fell more than 5 per cent in a single day.

It has continued to slide and after fresh falls last night it is now off nearly 12 per cent since its most recent peak in late February

Last month Collins has announced that the Ministry of Business, Innovation and Employment (MBIE) would look into how fair petrol and diesel prices were at the pump.

Advertisement

The equation on pump prices is complicated by variables like currency and there is no doubt that the kiwi dollar has also fallen in the past few weeks.

But the dramatic slump, which is also affects Brent crude that New Zealand imports, ought to more than offset the 4 per cent decline the kiwi dollar has seen in the same period.

Commodity analysts fear the sell-off may have some way to go after Saudi Arabia revealed it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month.

There are big economic implications, too.

The historic slump in fuel prices began in 2014 and exacerbated deflationary conditions around the world, prolonging a period of historically low interest rates.

Oil prices bottomed out in late 2015 and have been in recovery mode since.

A lot now depends on whether these oil price falls are sustained but the new trend has some economists worried.

SHARE THIS QUOTE:

Late last year the OPEC group of oil-producing nations agreed to production cuts which accelerated the recovery.

In tandem with a US economic recovery that had fuelled hopes that more normal inflation levels were returning to the world economy.

A lot now depends on whether these oil price falls are sustained but the new trend has some economists worried.

It is unlikely to affect the thinking of the US Federal Reserve which is expected to raise interest rates later this week.

But it will have serious implications for the rate outlook if the trend continues.

A Bloomberg report quotes Goldman Sachs research saying the rally in US credit has left little "buffer for shocks."

Meanwhile, keep an eye on your local petrol pump. Prices shouldn't be rising any time soon.

Minister Collins has said she expects her report back by the end of June.