NZ businesses feel oil pain

Dean Bracewell is watching Middle East events with concern. Photo / Martin Sykes

New Zealand businesses are being indirectly hit by fuel price increases.

Freightways managing director Dean Bracewell said New Zealand Couriers - one of the company's brands - introduced a surcharge when the price of diesel rose past $1.23 a litre.

That happened at the beginning of January, he said, when the firm initially charged a 0.1 per cent surcharge.

Yesterday, diesel prices across the country had reached about $1.47 a litre and Bracewell said the surcharge had reached 1.2 per cent.

He said the company was watching the events unfolding in the Middle East with concern.

Analyst Richard Hale from Hale Twoomey said New Zealand used about 6 billion litres of fuel a year, split evenly between petrol and diesel, so any large movements significantly affected spending.

Although it was difficult to tell when the unrest in north Africa and the Middle East might abate, the continuing demands from China and India would continue to underpin high prices.

There would also be a lag between stepping up supply - if that should be necessary from Saudi Arabia - and when it hit the market.

NZIER principal economist Shamubeel Eaqub has said events in the Arab world pose an additional risk to New Zealand's economy, both directly and through their potential effect on the global economy.

Oil prices in real terms are the highest since 2008 and before that 1980 and New Zealand's oil consumption per unit of GDP has not fallen nearly as much since the 1970s as in other developed countries.