Motorists face petrol price rises today, after a 3c-a-litre government excise tax increase, although one oil company says it will at least cushion them from a small amount of extra GST.

BP spokesman Jonty Mills, who initially said the company intended "absorbing a component" of the increase, later yesterday defined that as just under half a cent of extra GST on top of the excise rise.

The company would pass on to motorists all of the basic 3c rise as "a government-implemented transport tax increase" while absorbing the extra GST on top of that.

Discount oil company Gull said it would wait for this morning to assess its margins before seeing if it could absorb some of the tax rise, if only for a day or so.


"We might be able to do something short-term but I am not sure about the long term," said retail manager Graham Stirk.

But Z spokesman Jonathan Hill said his company would simply pass on the tax rise as a straight cost imposed by the Government.

He said there had been import cost and exchange rate movements "both ways - unfortunately none of which help motorists - and tax is just one of those things in life".

Caltex stations will lift petrol prices by 3c a litre, a spokesman said.

Automobile Association spokesman Mark Stockdale acknowledged the inevitability of petrol going up today, especially after commodity cost increases and a softening of the New Zealand dollar.

Diesel users face an equivalent increase in road-user charges, although those are not paid for at the pumps.

Today's excise duty rise pushes total tax on petrol to about 92.3c, or 42.7 per cent of the pump price. That includes 64.1c in excise and the rest in GST.

It follows a 2c excise rise in August last year and precedes more increases of 3c for each of the next two years, the proceeds of which all go into the National Land Transport Fund to pay for roads and public transport. Mr Stockdale said New Zealand still had the fifth-lowest fuel taxes of countries in the 34-member OECD.