KEY POINTS:
Energy Minister Gerry Brownlee has urged oil companies to drop petrol prices, warning them not to try to cash in on the many holidaying New Zealanders on the roads.
He says he believes oil companies still have room to cut prices because of
the low price of crude oil and the strength of the kiwi dollar.
And he is suspicious oil companies are trying to get the most out of the tens of thousands of motorists on the roads during the holiday period.
"Like many consumers, I can't help but think the time for further price reductions has arrived," he said.
"I would be disappointed if the oil companies are waiting until after the holiday season and high volume sales period, before deciding to act."
Oil companies hit back last night, saying the holiday season was not "high volume" and had no bearing on decisions about new prices.
They said they had been extremely responsive to international oil prices.
Caltex spokeswoman Sharon Buckland said the price of petrol had fallen about 80c a litre in the past few weeks.
"It's dropped like a stone," she said.
"The New Zealand companies have been extremely responsive to the people."
A litre of 91 unleaded cost $1.40 in Auckland yesterday.
It has dropped from a high of $2.19 a litre on July 17.
Diesel has dropped 74c a litre in the same time.
There were a series of price cuts in November, but the price has not fallen since mid-December.
Mr Brownlee acknowledged that substantial reductions in diesel and petrol prices had been made.
But he said that with international crude oil prices at record low levels - between US$35 and US$37 a barrel - and the kiwi dollar so high, there was scope to cut prices again.
Ms Buckland said petrol prices were based on various factors - not including the fact that it was the holiday season.
"For every day that the market trades, we have staff that monitor it. If there is a significant change of the market - either way - of course we'll review our prices."
It was important to remember that Caltex - and the other main petrol companies - did not buy from the US, Ms Buckland said. "We buy refined fuel on the Singapore market."
Shell spokeswoman Jackie Maitland said the company reviewed its fuel prices daily.
Gull general manager David Bodger said Mr Brownlee was wrong about oil companies waiting until the "high volume sales period" ended.
"It's interesting he calls it the high sales period because it's not - especially these past few weeks. People are on holiday.
"If there is an opportunity to drop our prices, we will."
Economists predict a big slump in world demand for oil next year.
Deutsche Bank chief economist Adam Sieminski said oil prices could hit a low of US$30 a barrel next year, because of the global economic crisis.
The bank predicts global demand will drop by a million barrels a day - three times the fall seen this year and the largest in 25 years.
That is a lower forecast than those of most other analysts or even Opec and the International Energy Agency.
But other bankers, including those at Citigroup and Barclays Capital, are also predicting big price falls.
