Ukraine Russia war helps fuel rising petrol, diesel prices in Bay of Plenty

The Ukraine war and economic sanctions on Russia are expected to drive up already high petrol prices, creating a "scary" time for motorists.

Petrol stations around the Bay of Plenty were this week advertising 91 between $2.627 and $2.789 per litre, 95 between $2.907 and $3.059 per litre, and diesel between $1.817 and $1.989 per litre.

According to Government monitoring, the national average price per litre at the end of February last year was $2.174 for 91, $2.318 for 95 and $1.389 for diesel.

The price of oil increased since Russia's invasion of Ukraine with it sitting at US$105 (NZ$156) per barrel compared to US$92 (NZ$135.84) the week before.

Meanwhile, an economic expert predicts inflation and high living costs will be with us for some time.

Rotorua motorist and hospitality worker Yolima Tavares Monterrosa told the Rotorua Daily Post her working hours had been significantly reduced, putting pressure on her petrol costs.

"It's scary sometimes," Monterrosa said.

"We know only what is happening today. Tomorrow all our plans could change.

"Our expenses changed drastically between November and January."

Monterrosa and her family of three have reduced the number of car trips each week so that they are only spending a maximum of $40 on petrol.

"There are no unnecessary trips. We reach our needs, nothing extra."

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This comes amid fears New Zealand will soon be more vulnerable to fuel supply disruption and shortages at the pump when a new fuel import supply chain system highly reliant on foreign ships comes into effect.

Prices in some areas of the country for unleaded 95 have already passed $3/litre and fuel commentators have indicated that $3/litre for unleaded 91 is also not far off.

"What's ridiculous is that you can spend double the amount of money to make the same number of trips," Monterrosa said.

"We have permanent expenses and responsibilities like our mortgage."

Monterrosa said wage increases did not meet the rising cost of petrol and inflation on other products.

Yolima Monterrosa says wage increases do not meet the rising cost of petrol and inflation on other products. Photo / Andrew Warner

Te Rina Marsh lives in Tauranga and travels to Rotorua two to three times a week. The 25-year-old's new car needs about 37 litres to fill up.

"It's pretty crazy," Marsh said. "I just got this car and it took $55 to top it up just now."

Marsh said she would usually fill up on petrol once a week. She estimated petrol would cost her about $80 per week.

Te Rina Marsh, 25, lives in Tauranga and travels to Rotorua two to three times a week. Photo / Maryana Garcia

One Rotorua-based commuter, who asked not to be named, said he thought twice about going out of town because of the petrol prices.

"It's ridiculous. The cost's just too high," he said.

"I like to go fishing out at Rotoiti but getting out there can take about half a tank."

He said the price of petrol not only made recreational fishing more expensive but also affected the cost of fishing for tangi.

"You've got to pay for the petrol in the boat too."

Kim Archer is the business director of Rotorua-based food truck business Tag Burger.

Archer said Tag Burger drove to markets across the Bay of Plenty with a lot of their business being in Tauranga.

"[Fuel price hikes] have affected us quite a bit. There is extra cost but I'm trying to absorb it.

"Your prices still have to be attractive to customers so you have to keep that in mind."

Archer said she believed the fuel prices and rising inflation would get worse before improving.

"Sustainability is going to be harder next year."

Ritchies Rotorua depot manager Bob Harlowich said petrol price hikes and supply chain issues had a "snowball effect". Photo / NZME

Ritchies Transport Holdings Rotorua depot manager Bob Harlowich said petrol price hikes and supply chain issues had a "snowball effect".

"Our prices had to increase accordingly. We try and pass as much on as possible but some prices are set and we have to live with them."

Harlowich said most customers were understanding of price increases.

"They were almost expecting it. Most people realise that wages have increased as well."

Rotorua Chamber of Commerce chief executive Bryce Heard. Photo / NZME

Rotorua Chamber of Commerce chief executive Bryce Heard said the chamber had not received complaints specifically about petrol prices.

"What we have heard expressed is concern about inflation and rising costs across the board."

Heard said topics like price hikes on food, services and petrol as well as poor supply chain logistics were all part of the same discussion.

First Union organiser Marleina Kerapa said the cost of petrol, along with big increases in the cost of rent, housing and food was causing a "crisis" for union members.

"Many people are having to seek extra hours beyond what they're offered just to cover the basics and the increased cost of living," Kerapa said.

"There is very little room for quality of life after this."

Kerapa said low pay rates were not attracting people to work for some of the big companies in the area, and many businesses weren't offering enough hours for people to live on.

"Generally I think people are feeling very financially stressed and struggling to live week to week, let alone enjoy themselves and have a good social life outside of work."

How can the invasion of Ukraine affect New Zealand's economy?

Otago University research economist Dr Murat Ungor. Photo / Supplied

"Today's economy and production is highly connected. We live in a small village," Otago University research economist Dr Murat Ungor explained.

"Toys for babies or bicycles, laptops, these are final products but within those products, there are many parts which are produced in different countries.

"If there is a problem in one part of the world this affects the rest of the production process."

Ungor said Russia is the major exporter and producer of oil, natural gas, to Europe.

"Last year half of Russia's exports were to the US, UK and Europe."

Ungor said the war in Ukraine would lead to an increasing energy crisis and also cause the costs of goods to increase.

"Russia and Ukraine also export primary and agricultural goods so there will be big fluctuations in food prices.

"We expect increases in food, energy and oil prices, inflation is going to increase in many countries and there will be spillover to New Zealand."

Ungor said the most up to date rate of inflation was calculated at 5.9 per cent. According to recent predictions the inflation rate at the end of March could reach as high as 8 per cent.

"Everything depends on the duration of this conflict."

Ungor said forecasts can always change but 2022 would be a tough year.

"One thing we can say is we are going to live with inflation, with high living costs for a while. It's not a temporary, short-term situation."