Transport charges unlikely to drop

By Imran Ali

3 comments
Caltex on Western Hills Drive
Caltex on Western Hills Drive

Northland's road transport sector has ruled out an immediate fall in charges despite fuel prices plummeting to their lowest levels in nearly seven years, citing higher operating costs.

Another fuel price reduction on Tuesday prompted service stations around Northland to discount their prices, with Mobil Kamo the cheapest for 91 petrol at $1.59 and diesel at 77 cents per litre yesterday.

The last time both commodities were selling at those rates in Northland was in 2009 and 2007 for 91 and diesel respectively.

International crude oil was selling at US$27.82 per barrel yesterday.

The national prices, excluding discounts, yesterday were $1.80 for 91 and 93 cents for diesel, AA PetrolWatch spokesman Mark Stockdale said.

Mr Stockdale said had the New Zealand dollar stayed the same as it was a year ago, the pump price for 91 would have been about $1.65 a litre.

The NZ dollar fell more than 13 cents in the last year, offsetting lower petrol prices.

Whangarei had a fairly competitive petrol market so the pump price in the district was likely to be lower than the rest of Northland.

"But unlike diesel, petrol prices would never get as low as the pump prices in January 2007 ($1.38/litre), thanks mostly to petrol taxes having risen 28 cents per litre since then," he said.

On how long petrol prices were likely to stay low, Mr Stockdale said it was really difficult to say but signs were definitely looking good.

"The reason crude prices are down appears a lot to do with concerns about a slide in the global economy. They don't seem to go away but a caution though that a falling New Zealand dollar is having an impact on petrol prices."

Mr Stockdale said the issue of a corresponding fall in public transportation charges was an interesting topic but one which was best answered by the likes of freight companies.

"I think AA's position is consumers have rightly been asking why a drop in fuel prices, particularly diesel prices, are not reflected in transport costs?

"Clearly, fuel costs of transport companies have fallen significantly in the last few months and consumers understandably should start reflecting on the prices they've been paying," he said.

Road Transport Association New Zealand upper North Island spokesman Keith McGuire said historically most transport companies have been on the receiving end of sustained higher fuel prices.

They have had to constantly absorb increasing costs for road user charges, insurance, and wages that did not generally come down, he said.

"Some operators may be making a bit more money but then there are other costs that offset their profit. Fuel is just one component of their costs."

He said the association's members were being asked why they were not reviewing their rates accordingly.

Sustained lower fuel prices, he said, may lead to some getting to a point where they could review their charges.

"Transport operators are also having to reinvest in new equipment to remain competitive in the current market," Mr McGuire said.

"Our most recent transport operator cost index actually shows that the reduced fuel costs have been mostly offset by increases in other areas."

Mr McGuire said if transport rates were reduced too much, it could force more operators out of business.

- Northern Advocate

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