International oil prices have fallen more than 10 per cent over the past month, bringing some blessed relief at the pumps for hard-pressed consumers.

But to break out in a full-throated rendition of the Hallelujah Chorus would be premature.

The fall so far has only taken oil prices back to where they were in May.

They are still around 240 per cent higher than they were four years ago.

Retail petrol prices have not increased quite so much, some 75 per cent over the same period. The increase is smaller partly because the tax take per litre has not risen as much as the crude oil price and because the exchange rate has taken some of the sting out of higher US dollar prices.

The IMF estimates that the US dollar's depreciation since 2002 explains US$25 a barrel or about a quarter of the rise in the oil price since then.

But with the New Zealand economy almost certainly in recession and the Reserve Bank in easing mode, the NZ dollar is now 9 per cent off its peak early this year.

The depreciation has further to run and will at least partially offset any further declines in the world price of crude oil.

What has driven oil prices so high so fast is strong growth in demand from developing countries, led by China, with which the supply side of the industry has struggled to keep pace.

As spare capacity has been compressed, markets have been more easily spooked by news, like sabre-rattling by and at Iran, which threatens a supply disruption.

The IMF reckons 95 per cent of the growth in demand for oil since 2003 has come from developing economies, led by China and India.

The International Energy Agency (IEA) forecasts the developing world's oil consumption will equal that of developed countries by 2015.

BP attributes just over half of the growth in oil demand last year to China alone. It now has around 160 million vehicles on its roads and petrol which costs about half what it does here.

But it is hardly fair to point the finger at China or blame any developing country for developing. If China's rate of vehicle ownership was similar to ours, it would have something approaching a billion on its roads.

The problem is really the sluggish supply side response of the industry to soaring oil prices.