Oil companies deny accusation, saying NZ refining costs need to be considered.

New Zealand drivers are paying about 4c a litre more for their fuel than justified by import costs, says the Automobile Association - a claim denied by oil companies.

Calling yesterday for a price cut, AA spokesman Mark Stockdale challenged the suppliers to explain why they needed what he claimed were larger than normal margins.

That follows six weeks in which 91-octane petrol has been knocking $2.20 a litre - only 2c below a record set in May last year - and diesel has been selling at just under $1.57.


Mr Stockdale said imported costs of both fuels had fallen by 3c to 4c a litre since the last recent price rise, on March 14, yet pump prices remained constant throughout last month.

"We don't expect changes overnight - it would probably be frustrating if prices changed at the pump every day in response to every half-cent movement in the commodity price," Mr Stockdale said.

"But based on past behaviour, they should have dropped the price by now. If imported costs had increased by 4c in the last fortnight we would have seen a 4c [pump price] increase by now."

But the AA's challenge was rejected by Z Energy spokesman Jonathan Hill, who indicated it was being simplistic in citing only the import margin.

"What they are not factoring is where refining margins are at," he said.

By that, he meant the cost of refining fuel at Marsden Pt and then shipping it around the coast to the rest of the country.

Mr Hill said his company had taken a long-term decision to refine 70 per cent of its product at Marsden Pt and then ship it at a cost of $4 to $5 a barrel.

Although the overseas refining margin had sunk to about $3, Z believed it to be in New Zealand's best interest to retain local production capacity.

That was why Z and BP had supported a planned $365 million upgrade of the Marsden Pt refinery, which is understood to have been opposed by Chevron and Mobil, although they were outvoted by the larger suppliers and other shareholders at a board meeting this month.

But Mr Hill denied that the oil companies were already trying to pay for the expansion by keeping pump prices up, and said Z was constantly reviewing what it charged motorists.

BP spokesman Jonty Miller pointed to a long time lag for crude oil passing through the refinery, meaning higher input costs.

He said BP reviewed its prices daily, and would do so again today.

Gull, which sells fuel for 1c a litre less than the big suppliers at most sites and for less than that at unstaffed stations, says it would keep trying to reduce prices as much as possible but had faced a number of recent cost rises such as bank charges.