Running on empty

Sneha Dewani with her husband Sree Swami and daughters Diya Swami, 5, and Shriya Swami, 3. Photo / Natalie Slade

Sree Swami is doing everything he can to save on his family's petrol costs.

He is walking more, car pooling where he can and has cut back on unnecessary trips in the car. He even uses supermarket vouchers to get fuel discounts.

He has also cut back on holidays, food and alcohol spending but, like many Aucklanders, he sees buying fuel as an increasingly painful necessity.

Petrol prices jumped to $2.16 a litre in the past week, thanks to political unrest in the Middle East and the loss of oil production in Libya, combined with the weakening New Zealand dollar. Experts are warning prices could reach $2.50, especially if the popular uprisings spread to oil giant Saudi Arabia.

Mr Swami, 40, an insurance administrator, said he finds the prospect of petrol hitting $2.50 a litre "really scary".

"Going out will be a dream. We can't make any outings."

It costs about $90 to fill the family's 2003 Honda Stream and he gets between 460-480km to a tank. Sometimes he has to put in another $20 worth to see the family through the week.

On his way to work, he drops his 5-year-old daughter, Diya, at school, about 1km from home and 3-year-old Shriya at childcare, within 2km of home in the opposite direction.

They have started walking where they can but it isn't always possible.

"Most of the time we used to take the car to the childcare centre, or even Playcentre. Now, we use the old fashioned method of walking but again, it depends on the weather."

The family has given up recreational drives to Pukekohe and even their six-monthly holidays have been cut back to one a year. The six-pack of beers he used to treat himself to weekly, are now bought only once every three months.

They buy groceries on the way home from work to save on extra mileage.

"Earlier, when you [felt] hungry you'd just go out and get some food. Now? No choice. You have to force yourself to get up and make something in the house ... you're pushed into a strict life. Eat what you have.

"Earlier, we used to do shopping on Saturday or Sunday. Now, we include the shopping on the way home from the office so that we save on fuel.

"We used to allow for outings for dinner, now we're trying to cook and eat. Or we get friends over or go to friends' houses and share. We can't think about fun drives, we need to stay in and watch TV and videos ... you can't make any trip out."

His wife has recently returned to full-time work to boost their budget but the family's combined income, after tax, is about $1000 a week.

"It's really hard. If you have children around 3, 4 or 5, it's really a nightmare."

Mr Swami said petrol wasn't the only thing causing him problems.

"It's not just fuel. The rent has gone up, water charges have gone up. Everything has gone up. GST's also gone up. Some places we're trying to cut down but it doesn't work when you've got two children, because whether you're fed or not, you have to feed them."

However, Mr Swami said the family can't cut back on fuel costs. Their public transport experiences have been a "nightmare", with trains costing about the same price as driving and requiring an extremely early 4.30am start time in order to guarantee being at work on time.

He said the trains they experienced were either late, or full. He had paid extra childcare costs because he was unable to get his youngest child from her daycare centre in time.

"We need the car," he said. "We need some subsidy somewhere."

Auckland bus driver Noel Rielly, 57, also has fears about fuel costs rising.

"I start at 5 o'clock in the morning and there's actually no other way to get to work other than the car. I'd have to change my shifts and that means a change in lifestyle.

"If I didn't have a car, I'd have to catch the bus to work. So I'd start about 7 o'clock and I wouldn't finish until about 7 at night. It would change my whole lifestyle ... it could have a big impact because it could change the whole structure of my job."

His 1995 Mazda Capella costs about $55 to top up from half-full to full, which he does weekly.

"It's gone up $15, $20 in the last week," he said on Wednesday, which he was quick to point out was a top-up completed before the latest price hike.

"I used to budget $40 and that would usually [half] fill it and I filled it up the other day and it was $55. It's a big jump."

It is a 30km round trip from his home in Glen Eden to work in Freemans Bay. If he drives to the supermarket or elsewhere, his fuel costs go up even more.

"You've got to think, maybe I should start walking."

Mr Rielly said his family didn't have a car when he was growing up because it was a luxury and it seemed that was becoming the case again now.

"It doesn't really matter how conservatively you drive, the price of running a car is just going beyond the average working person. It's becoming a luxury."

He is also concerned about what would happen if more people opted to use public transport.

"We haven't got enough buses to cope with the influx. The biggest bus is 50 seats. Once you've got 50 people on, that's it ... you're leaving people on the side of the road.

"People think, 'I'll leave the car at home and I'll get the bus' and I just can't get them on, so that causes more frustration and friction because people can't afford to take their car to work and they can't get on the bus or train because it's full."

He has already cut down his driving distances, but is unsure how far his budget can go.

"Sometimes we go [away] for weekends and you've got to think about how much it is going to cost and you just budget for it.

"I think if it's going to cost more than 100 bucks, I might have to not go. You've just got to be so careful about where you go and what you do."

Shamubeel Eaqub, principal economist at the NZ Institute of Economic Research, believes even tougher times are looming.

Global food prices are also on the rise and Mr Eaqub says if petrol reaches $2.50 per litre, a plausible outcome, the average household will be $17 worse off each week - even when recently-lowered interest rates are taken into account.

Added to that, rising oil prices always impact on food prices because farmers and businesses use fuel to transport their products.

New Zealand's "far away" geographic location also places it at risk of increased shipping costs.

By mid-2010, 68 per cent of the average household's weekly spend was on unavoidable expenses like food, fuel, interest, insurance, health and education, Mr Eaqub said.

"That means when food and fuel prices rise, spending, in discretionary items - large ticket items, etc - could fall.

"Households could face a period of significant misery."