KEY POINTS:
Mobil has joined the other major oil companies in lowering their petrol
price by 8 cents and diesel by 6 cents a litre.
They join Caltex, Shell, BP and Gull who pointed to a decrease in the international price of refined fuel for today's price cut.
Shell, BP, Mobil
and Caltex are now selling 91 octane for 181.9 cents, while diesel is now at 135.9 cents a litre. Gull is selling its bio-fuel mix at 178.9 cents a litre and regular 91 at 180.9 while diesel is selling at between 131.9 and 134.9 cents a litre.
Dave Bodger from Gull said overnight the price of refined products fell by $7 a barrel. "It came back significantly," Mr Bodger said.
BP spokeswoman Diana Stretch agreed. She said despite the heavy reductions in the price of crude oil over the last weeks, at times the refined prices were moving the other way.
"At times we were looking at an increase, not a decrease," Ms Stretch said.
The move comes after it was revealed that drivers were paying 30c a litre more for petrol than they were the last time crude oil prices were at yesterday's level.
Economists were quoted in today's paper saying that our fuel prices should come down substantially and soon.
While crude oil has been steadily falling, we are now seeing the decrease flow through into the cost of refined product. The kiwi dollar has also stabilised over the last couple of days, helping us to pass on this significant saving to motorists.
Oil prices closed at a new 14-month low beneath US$70 a barrel overnight, bringing its price to less than half its July record high after the government reported massive increases in US crude and petrol stockpiles.
ANZ chief economist Cameron Bagrie said petrol prices had plenty of room to come down. "I'm surprised they're holding up at the moment and would expect them to be a lot lower in the coming weeks."
The weak New Zealand dollar has blunted the effects of falls in the price of oil.
The strength of the kiwi shielded New Zealand from the worst of the price rises this year; now its relative weakness is stopping us from enjoying the full effects of the falls.
But the dollar rallied enough yesterday - above US62c - that further reductions in petrol prices are likely.
When crude oil prices were last at yesterday's levels, 13 months ago, 91-octane petrol was $1.59 a litre.
Yesterday, it was 30c a litre above that at $1.89.
Some of that difference can be attributed to higher prices for refined fuel, but most is down to the exchange rate, said AA policy analyst Mark Stockdale.
Mr Stockdale said crude oil was only one component of refined fuel.
A storm threat near a refining plant on the US Gulf Coast could send refined-fuel prices soaring, even if crude oil was coming down in price.
The last time refined fuel cost the same as it did yesterday, the pump price was $1.69 a litre.
Economists said that despite recent falls in the New Zealand dollar's value and rises in the cost of refining crude, there was room for petrol and diesel to drop in price.
UBS senior economist Robin Clements said refined fuel had "displayed some different behaviour" by rising as the cost of crude went down.
But despite that, there was "margin for a reduction" in the price of petrol and diesel.
Shell dropped the price of diesel 6c a litre on Wednesday - followed by Gull and Caltex - but held off reducing petrol prices.
Mr Stockdale said the high kiwi dollar had protected New Zealand from the worst of soaring petrol prices earlier in the year. If the dollar had not been strong, he said, petrol would have risen to $2.50 a litre.
But the fall in our dollar relative to the US had left us with less buying power.
In some places, the lower crude prices are filtering through.
Qantas yesterday dropped its fuel surcharges for air travellers in Australia because of falling oil and jet fuel prices.
And the international investment bank Goldman Sachs this week slashed its forecast for the price of US-traded oil from US$115 a barrel at the end of the year to US$70.
It said it had "seriously underestimated" the effects of the global financial turmoil on commodity demand, suggesting more good news could be on the way for motorists.
Crude is now more than 50 per cent down on its July peak, when it went above US$147, and analysts have reduced their world demand growth estimates after recent gloomy financial data.
"The market is just very worried about a severe international economic downturn," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "They're thinking that oil consumption will be weaker than expected."
- ADDITIONAL REPORTING: AGENCIES
