Petrol prices are on the rise again and motorists are likely to face more pain at the pump over the coming days as a spike in global crude oil prices flows through to the retail market.
Brent crude oil, the variety used in local petrol, has spiked above US$90 a barrel for the first time since November 2022.
The latest surge comes as the Commerce Commission today sent a warning shot to local petrol companies over anomalies in price movements across the past year.
The commission has sent a “please explain” letter to retailers over perceived anomalies in price movements.
It noted large regional differences with consumers in Northland paying a lot more than those in the Waikato.
Meanwhile, global oil prices have now risen more than 25 per cent in three months, with consumer pain exacerbated by the removal of Government tax breaks on June 30.
Those tax breaks, introduced in March 2021 as oil surged above US$110 a barrel, were removed on June 30 with oil at just US$75 a barrel.
Commerce Commission chair John Small said monitoring through to March 30 found some of the pricing levels and variations being recorded in different cities and regions “concerning, with no clear underlying factors”.
According to the petrol price comparison website Gaspy, the average retail price for a litre of 91 Octane fuel is now $2.92, up 3.5 per cent in the past four weeks.
The average price for a litre of 95 Octane is $3.11, up 3.6 per cent.
Prices will vary around the country and Auckland motorists also face an extra 10c regional fuel tax.
Further rises seem inevitable after the global price movements of the past week. There is typically a lag of a few days between the global price movements and the price at the pump.
Overnight Saudi Arabia and Russia announced they would extend production and export cuts until the end of the year, sending the price up another 1 per cent.
The Financial Times has reported industry concerns that the Russians and Saudis may look to use high oil prices to try to influence the US elections.
Higher oil prices will make it harder for Western central banks - including the Reserve Bank of New Zealand - to remove inflation from the economy.
If inflation stays higher for longer that could mean interest rates doing the same, putting consumers under even more pressure.
Local motorists will certainly be facing the highest prices since March 2021 when the initial pandemic-related fuel shock forced the Government to introduce the temporary fuel tax break.
In early March 2021, petrol pump prices for 91 and 98 octane fuel hit 3.07 per litre and 3.33 per litre respectively with Brent Crude hitting a peak of US$118.
Across the same period, the Kiwi dollar has fallen about three cents against the US dollar (from US62 to US59c) adding to the local currency costs of importing fuel.
But at that time the New Zealand dollar was trading at US71c.
The Commerce Commission’s report today showed motorists in Whangārei paying more for fuel than the other cities studied.
Small said this could not be easily explained by the data supplied to the Commission.
”Marsden Point is our nearest port to major fuel sources like Singapore and South Korea, and being near the Marsden Point import terminal means higher prices can’t simply be explained by higher ocean or local transport costs. Land costs in Whangārei don’t shed any light on these prices either.”
In contrast, Hamilton was seeing some of the lowest prices in the country – another anomaly the commission wanted major fuel companies to shine a light on.
”This significant variation in pricing is of concern to us so we are asking the major fuel companies to help us understand the data being reported to us,” Small said.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.