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Shell Raises Prices

MEDIACOM-RELEASE-SHELL-NZ

Shell Raises Prices, And Sets Record Straight On Rising Costs

Shell New Zealand is raising petrol and diesel prices by three cents from 10am today.

Shell says the move is very regretful but it has no choice in the face of runaway finished product costs.

Shell wants the public to be aware of the facts, and appreciate that the increases are beyond its control.

"For the record, whilst New Zealand imports approximately 80 per cent of its crude oil from the Middle East, about 40 per cent of its petrol is imported. It is these imports which are making prices skyrocket at the moment. These finished product costs, together with the weak New Zealand exchange rate and the level of Government taxes, are the most significant elements directly reflected in the prices at the pump in New Zealand."

"As we have endeavoured to explain to MPs including Mr Anderton, it is just too simplistic to directly link only the cost of internationally traded crude oil with the final retail price of finished petroleum products delivered to a national network of sites right across New Zealand."

"Shell's petrol and diesel finished product prices are based on an import parity which means prices are set relative to daily import prices for petrol and diesel (not crude). It is essential to understand that these import prices for petrol and diesel do not always move in unison with crude oil prices and this is the case at present. Global market factors like the current heavy demand for petrol in the Northern Hemisphere summer also affect the prices. Also, supply of motorspirit in Australia and Asia is very tight leading to higher petrol and diesel product prices in the past two weeks. We've seen crude costs reducing, while finished product prices rise."

Shell says the combination of these external market forces, coupled with a currently weak exchange rate for importers, give the Company no option but to pass some costs on.

Shell says it is also important to bear in mind that almost half the cost of a litre of fuel is returned to the Government as taxes.

Ends

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