Petrol pain to get so bad you'll be forced to change your ways

By Michael Dickison

Commentators say Kiwis will have to get used to fuel prices continuing to rise. Photo / Paul Estcourt
Commentators say Kiwis will have to get used to fuel prices continuing to rise. Photo / Paul Estcourt

Petrol prices are likely to keep climbing past this week's record highs, despite a sudden drop in crude prices yesterday.

Some analysts say crude oil prices could rise by as much as double in the next few years, causing related increases at the pump.

The trend is expected to force major shifts in behaviour, starting with transport and extending to other consumption habits.

New York's main crude oil index fell 8.6 per cent yesterday on the back of weak economic indicators, leading to expectations of a small dip in petrol prices next week.

But economists agree that the long-term outlook for consumers remains bleak.

UBS New Zealand senior economist Robin Clements said the cause of the rising prices was straightforward - demand had outstripped supply.

"Energy use in countries like China and India is growing, and oil supplies are under some pressure," Mr Clements said.

Lloyd's of London and Chatham House, a British think-tank also known as the Royal Institute of International Affairs, said that crude oil prices could double in two years, reaching $200 a barrel by 2013.

The chief economist of the International Energy Agency sounded a similar warning, saying last week that the peak of oil production had already passed - five years ago.

Westpac economist Dominick Stephens said this country would be buffered against price rises because the New Zealand dollar's exchange rate loosely followed oil price movements.

Goldman Sachs economist Philip Borkin said New Zealand would still see an increase in prices, though it was difficult to speculate how much.

"We need to get used to petrol prices getting higher."

Interest.co.nz managing editor Bernard Hickey predicted that society would have to adjust to petrol prices reaching as high as $4 a litre.

"We simply have to prepare the economy for very expensive oil. New Zealanders won't have a choice," he said.

The growth of China was a fundamental shift demanding billions of barrels of oil a day, Mr Hickey said.

Petrol price rises have already forced changes in behaviour, with Auckland Transport reporting last month that public transport patronage had increased 9.6 per cent in one year.

Claire Pascoe, a spokeswoman for Wellington-based service Let's Carpool, said the number of people signing up every month to share rides had surged 50 per cent in a year.

There were now almost 2000 people using the service for carpooling. Transport Ministry figures show that new cars being sold are increasingly fuel efficient.

"It's become a part of people's thinking," said Imported Motor Vehicle Industry Association chief executive David Vinsen. "There's a progressive trend towards looking for fuel-efficient cars."

Stephen Pollard, owner of importer the Clean Green Car Company, said there was huge demand for hybrids - so much of it worldwide, in fact, that it had become almost impossible to source any used ones.

The trend was instead for smaller cars, but there could be as much as 40 per cent difference in fuel efficiency even between two similarly sized cars, he said.

Automobile Association spokesman Mark Stockdale said motorists could also save as much as 40 per cent of their fuel costs by driving more smoothly and avoiding excess drag and weight.

"That's $1000 a year for the average motorist - a huge saving and far, far more than the costs of fuel increases in the past year," Mr Stockdale said.

Spokespeople from the major oil companies said yesterday that they were closely watching Singapore refined oil prices and would not immediately be dropping prices at the pump.

Green Party analyst Julie Genter said that easily obtainable oil had run out, and petrol companies were now turning to deep-sea drilling at times more than a kilometre under water.

- NZ Herald

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