The cost of getting from A to B is on the rise again. The pump price of fuel rose a staggering 7c a litre last Friday as the GST increase bit and the Government added another 3c a litre in tax.
We often hear grumbles about petrol stations, but hidden deep within that pump price is another story. According to the Ministry of Economic Development, on October 1, 2009 56c out of every litre went on taxes. Since then petrol companies have had to pay the Government's global warming tax which added about 4c a litre, and then there's the latest 7c a litre increase.
In reality, it's fair to say that the biggest "winner" from fuel sales is the taxman (and taxwoman). About 40 per cent of the cost of filling a vehicle is going into taxes of some kind. In other words, if you put $20 worth of fuel in your tank, $8 goes to the Government. Probably about $10 represents the actual cost of the fuel itself. That's the cost of the crude, refining it, and transporting it to the retailer. The retailer receives the other $2 more or less from which they pay their costs (rent, wages, holiday pay, KiwiSaver contributions, power, repairs, etc) and a residual as a return on the money they have invested, and a reward for their effort and risk.
So what will affect price rises in the future? The main factors are the price of crude oil, which is paid for in US dollars, the US-Kiwi dollar exchange rate, and government taxes.
So now we know why petrol is so jolly expensive, here are some ways to consume less. The Government's Energywise website has some useful tips:
Walk or cycle instead and combine several small trips into one journey. Avoid short trips. A car uses 20 per cent more fuel when the engine is cold.
Consider car pooling. Two people in one car is twice as efficient as two cars with one person each.
You could save about 20 per cent of your fuel by driving more efficiently. The basic rule is don't drive like you're racing in Bathhurst. Drive smoothly and stay at a constant speed. Reducing your speed by 10 km/hr can knock about 10 per cent off your fuel consumption.
Keeping your tyres at the right pressure saves fuel.
Turn the air conditioning off.
In older cars, running it uses about 10 per cent more fuel.
Don't carry excess weight. Take the golf clubs out of the boot. Remove the roofracks to reduce drag.
If you are going to be stationary for more than 30 seconds, switch off your engine.
Buy a car that suits your needs. A V12 E-type jag may be James Bond's car of choice, but is not likely to suit those with more modest lifestyles.
Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at