Record Fuel Costs Push Petrol Prices Up

Soaring refined (ready-to-go) petrol costs and the weak NZ dollar have forced BP to lift its petrol and diesel prices by three cents a litre at its company-owned service stations with immediate effect.

BP’s Managing Director Peter Griffiths said since July 3 when BP last lifted its prices, the cost of refined petrol has risen by around NZ$7.50 a barrel - the equivalent of around 5 cents a litre - to a record high of NZ$83.19.

As BP buys its fuel in US dollars, our weak exchange rate also means BP is now paying about NZ$10 a barrel (or 7 cents a litre) more than it did in January this year.

The increase takes prices at most BP company-owned service stations in the main centres to $1.14.9 (Unleaded 91) and $1.19.9 (Premium Unleaded) and diesel to 77.5 cents.

BP buys about half its petrol as ready-made fuel from overseas refineries. Marsden Point Refinery in Whangarei does not have the capacity to manufacture all of New Zealand’s petrol needs.

Although crude oil had dropped by around NZ$5 a barrel (or 3.5 cents per litre) since early July, in the past week, crude oil prices have risen again - by around NZ$2 a barrel.

Mr Griffiths said refined costs which traditionally keep track with crude oil costs have leaped ahead in recent months.

“The refined market is driven by supply and demand. At the moment, demand is up due largely to the buoyant United States’ economy and also high demand in Asia. The end result is that fuel buyers are having to pay a lot more than they did a month ago.”

Mr Griffiths said the pressure has been on BP to lift its prices for the past three weeks, but he resisted in the hope that refined costs would start to drop to match earlier falls in crude costs.

“Unfortunately, that hasn’t happened and we can no longer afford to carry the extra costs.
We are currently making just 1 cent a litre profit for every litre we sell and in the commercial part of our business, we are losing money. No company can expect to survive under those sorts of pressures without passing on some of the extra costs.”

Mr Griffiths said he is very aware that lifting prices is unpopular and affects people’s lives. “All I can do is repeat our promise that we will swiftly pass on lower prices to motorists once we start paying less for fuel.”

ENDS

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