Recession nears end, and petrol skyrockets

Petrol has risen by 8c and diesel by 5c at most outlets since the beginning of this month. Photo / Amos Chapple

While pulling out of recession is a good thing, it also has its problems. Increased demand for oil from China coupled with a global shortage of oil refineries has sent petrol prices to a 16-month high.

Motorists were hit by increases of 5c a litre to 182.9c for 91-octane petrol and of 3c to 115.9c for diesel at BP and Caltex pumps on Tuesday, while the other three oil companies waited it out.

But yesterday, after Shell and Mobil announced more modest rises of 3c for petrol because of a stronger New Zealand dollar relative to the oil-trading greenback, BP and Caltex were quick to cut their prices by 2c to match them.

Industry minnow Gull was alone last night in holding back from any price rises, as general manager Dave Bodger hoped for an easing of cost pressures from its Singapore suppliers.

Despite yesterday's manoeuvres by the big players, their 91-octane price of 180.9c at main city pumps is the highest that recession-hit motorists have had to tolerate since October 2008.

After being lulled by more than a month of price stability, they were hit initially last week by increases of 5c a litre for petrol and 2c for diesel.

The latest rises mean petrol has risen by 8c and diesel by 5c at most outlets since the beginning of this month.

Automobile Association senior analyst Mark Stockdale said the rises were not surprising as they reflected stirrings of global economic growth following the long recession.

Although he feared more rises as economies continued to recover, he expected these to be relatively gradual, sparing motorists any dramatic spikes such as to the record price of 218.9c hit by 91-octane petrol in mid-2008.

Such was the impact then on household budgets that the Government attributes a reduction in the road toll for that year on a decline in distances travelled.

Mr Stockdale welcomed the second takes yesterday by BP and Caltex, saying: "It's good to see that competition is alive and well."

He said a strong New Zealand dollar of recent times had cushioned motorists against mounting international cost pressures, and acknowledged they could not count on it staying so high.

Caltex spokeswoman Sharon Buckland said the dollar's volatility in recent days, during which it sank below US70c before recovering yesterday, made fuel prices extremely hard to predict.

Her counterpart at BP, Diana Stretch, said motorists would be paying 38c more for petrol if the New Zealand dollar were at the same low level it was a year ago.

She warned of a potential rise of 12c a litre if the Government lifted GST to 15 per cent on top of extra charges of 3.5c to 4c expected from the emissions trading scheme in July and a further fuel excise increase of 3c in October.

Labour's transport spokesman, Darren Hughes, said a rise in GST on top of rising petrol prices would make life harder for New Zealand families.

Feeding you car:

91-octane/litre (main pump prices apart from Gull)

* Today: 180.9c

* January: 1163.9c

* October: 156.9

* 12 months ago: 163.9c

July 17, 2008218.9c