Watching closely.

Alliance leader and Deputy Prime Minister Jim Anderton says he will be keeping a very close eye on petrol prices over the next month.

International oil prices are expected to fall sharply following an announcement that Saudi Arabia and other oil producers expect to boost production by up to 500,000 barrels a day.

Oil prices have already dropped by more than US$5 a day since their peak in late June. International spot prices for oil are currently at about the same level they reached in late May.

"Pump prices in New Zealand were increased when international prices rose. At the time, it was plain that petrol companies were putting prices up a lot faster than they brought them down.

"If international oil prices begin to come down as expected in the next few weeks, I will be watching very closely to see if the petrol companies reduce pump prices just as fast as they put them up."

Jim Anderton said the most conspicuous apparent failures of competition in the petrol market were regional variations in petrol prices.

"I have met with petrol companies and I am yet to hear a satisfactory explanation for why petrol is six cents a litre where there is competition from Gull. Yet when the major petrol companies face competition only from each other, that is isn't sufficient competition to produce the same low prices," Jim Anderton said.

© Scoop Media