Petrol soars: Get used to it

Motorists looking forward to getting away at Easter were dealt a painful blow yesterday as petrol and diesel prices soared 6c a litre to what is effectively an all-time high.

Increases by the main oil companies sent the price of 91-octane petrol rocketing to 161.9c a litre, and 95-octane to 166.9c at most city pumps, lifting the cost of filling up many large cars to well over $100.

Diesel, which costs more than petrol to import but which is taxed through road-user charges rather than at the pumps, rose to a record 122.9c a litre.

Petrol is also at a record, apart from a few hours last week when BP led prices up for both grades before a lower pitch by Shell knocked them back down.

There was no holding back yesterday, as the companies said they could no longer absorb relentless international cost rises.

And economists say motorists will just have to get used to rising fuel prices.

Robin Clements of UBS Investment Bank said: "Basically we are going to have to learn to live with higher and higher petrol prices."

BP spokeswoman Diana Stretch said the cost of buying petrol on the international market had jumped 15 per cent in the past fortnight, and diesel was up 11 per cent in New Zealand dollar terms.

It now cost $126.50 to import a barrel of refined 91-octane petrol, compared with $110 two weeks ago, and diesel had jumped from $128 to $142.

The oil companies had also carried an inflation-adjusted tax rise of 0.8c a litre since April 1 without passing it on to motorists until yesterday.

Jackie Maitland of Shell, which spiked BP's guns last week with a more modest temporary price rise, said there was no way the company could keep absorbing the increases.

Automobile Association motoring affairs manager Mike Noon, who cried foul last week over what he called an "outrageous" increase first by BP and then Caltex and Mobil, was in a more conciliatory mood yesterday.

"It is not entirely unexpected because the indicators have been moving over the last week or two in the cost of both finished product and crude."

Even so, Mr Noon said it was a very large increase for motorists to cope with, particularly for those looking forward to getting away from home for the Easter break.

"It is very disappointing to have such an increase before one of the busiest driving times of the year."

Caltex spokeswoman Sharon Buckland said her company was similarly disappointed.

"I'm a motorist, I don't want prices going up 6c," she said.

"But we have been under considerable pressure over the last two weeks, we have done our best to absorb cost increases, and finally it has to break."

Ms Buckland said she had taken a call from a member of the public claiming the oil companies were engaged in a conspiracy to keep people from travelling over Easter.

"But we price our product out of Bahrain and they don't even have Easter over there."

Motorists are now paying 16.5 per cent more for 91-octane petrol than at the start of the year.

Economist Mr Clements said: "Unfortunately, it doesn't look all that flash.

"We've got problems with the security of supply in Nigeria, and potential conflict with Iran, so those are worrying markets.

"There is another hurricane season in the USA to come, our exchange rate which was insulating us is now dropping, so there are more down-sides than up-sides."

He did not want to speculate on how high prices may go, but said the recent rises were unsurprising because the world price of oil was at its highest since the southern US hurricane season, from June to November last year.

On top of that, the New Zealand dollar had fallen markedly.

Institute of Economic Research director Brent Layton said price movements were very tricky to predict.

"You need a crystal ball to know, because it's not just issues of supply and demand but of politics as well, which are always hard to forecast."

Alan Jenkins, an energy consultant, said there was a strong likelihood prices would go up again, but he guessed the cost of petrol would not hit $2 a litre.

"But who knows? It will get pretty close to it, I'd say. One day it will end, but guessing when that will be is just about impossible.

"In general, there is a tendency for [the petrol companies] to look like an America's Cup race, tacking in step with each other."

Motorists filling up at BP's Fanshawe St service station in central Auckland last night appeared more shell-shocked than angered.

"Six cents is a pretty big hike but there's nothing you can do about it," said Jo Dunne, on her way home to St Mary's Bay from work in Mt Wellington.