Subscribe to RSS$2 Petrol Price Barrier Passed
The $2-a-litre petrol price barrier has been broken and the Greens say this shows more than ever the Government needs to plan for a future of high oil prices.
Petrol prices rose 3 cents per litre on 14 December, and diesel 4 cents, the third price rise in a fortnight. So far, petrol prices are up 11 cents per litre since mid-October, and diesel up 8c, all since 1 December, according to the AA PetrolWatch.
The increases reflect rising crude oil and refined fuel prices, which began moving up in November, but were initially offset by the NZ exchange rate which climbed to 79 US cents. It has since fallen back to US$0.75, contributing to the retail price rise.
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The AA says that since November 23, the international price of oil has risen over US$7 a barrel (8%) to around US$90/barrel, in part due to strong demand from Europe and North America as they experience a harsh winter. Unlike NZ, much fuel is used for heating and power generation in the Northern Hemisphere.
As a result, the commodity price of refined petrol has increased 11% (with diesel up 8%), meaning the imported cost of petrol in NZ dollars has risen 12 cents per litre in the past week, and diesel 8c (compare that to the pump price rise). Note that at current commodity prices, the imported cost of petrol makes up about 90 cents of the price of a litre of petrol – and taxes another 87 cents.
The last time commodity prices were this high was in late September 2008, when we were paying $1.96 per litre for 91 octane – but taxes were 12 cents lower, although the exchange rate was worth 8 cents less. By comparison, the price of diesel, which has no fuel excise, was $1.54 a litre, due to a higher commodity price relative to petrol at that time.
Greens’ Gareth Hughes says: “It is irresponsible for the Government to borrow billions to build motorways without even considering the effect of high oil prices. NZTA has its head in the sand, using transport models based on past trends of cheap oil prices, which we know are over.”
He said that the government is ignoring its own advice from 2008, which predicted volatile oil prices increasing over time, and a resulting rise in demand for buses, trains, walking and cycling.
“The last time petrol was $2 a litre, New Zealanders switched to public transport. “More than ever, the Government needs prepare for an influx of train passengers and invest in transport solutions like the Auckland CBD Rail Loop and the Wellington inner city light rail project.”
* In October Greens’ Russel Norman asked the transport minister in parliament: Has the risk of oil shocks been explicitly considered in the business cases for any of the Roads of National Significance, if so what is the title of the report or other documents that cover the impact of high oil prices on the projected benefits and costs of these projects?
Minister of Transport replied: The NZTA informs me that scenarios for rising oil prices have been taken into account in a number of the assessments for the Roads of National Significance. However, no separate explicit analysis has been undertaken of the risk of oil shocks within the business cases for the Roads of National Significance. History shows that traffic volumes do fluctuate with respect to oil prices, especially to short term price increases. However, the underlying long term trend is a growth in traffic as travellers adjust their behaviour and change to more energy efficient or electric vehicles to maintain mobility. It is recognised in the Government Policy Statement on Land Transport Funding that fuel switching will offer an affordable long term transport energy source complemented by some modal shift in major cities.
7 Comments
So the government policy is “everything will be fine because everyone can just drive electric cars instead”.
Ouch. Actually I don’t really care. It was always going to happen. Sooner or later, probably sooner, we are going to have to face up to dwindling fuel supplies. So will the government.
this is why i want a Nissan Leaf this christmas :-p
Sorry antz, even in there very restricted launch markets they are sold out.
Dear Mr Joyce. Fuels up, less roads please. An expanded electric train network is needed! (and that’s a need not a want)
The $2 mark was passed a couple of months back, as BP’s premium brand (they sell 98, not 95) is about 15 to 20 cents higher than 91. It’s currently around $2.10
sigh, maybe not this xmas then.