Lower oil prices not flowing through to the pump

PetrolWatch – June 2011

Lower oil prices not flowing through to the pump

Petrol prices were stable during June, ending the month where they began, on $2.06 per litre for 91 octane in the main centres. The retail petrol price increased 2 cents per litre mid-month, before dropping 2 cents a fortnight later. Diesel prices also rose 2 cents, later dropping 5 cents to conclude the month on $1.46 per litre.

“With oil prices falling as much as US$15 a barrel during the month, a 2 cent per litre reduction in retail prices is not really going to cut it for motorists. While oil prices are down, they have not yet flowed through to lower commodity prices for refined fuels,” says AA PetrolWatch spokesperson Mark Stockdale.

“Compared to oil prices, refined petrol prices only fell US$5 a barrel, which equates to about 3 cents per litre at the pump when you allow for the fall in the NZ exchange rate over the same period. With the kiwi dollar on the rise again, fuel companies can now well afford to drop prices further,” Mr Stockdale said.

“It may seem odd to some that we have not had bigger decreases, but oil prices are one of three variables that influence what we pay at the pump. The two other variables are exchange rate movements, and refined fuel commodity prices – the product we actually put in our cars.

According to AA PetrolWatch, at current commodity prices the imported cost of petrol makes up just under half of the price of a litre of petrol, or 97 cents per litre – and taxes another 90 cents per litre. The imported cost of diesel is $1.02 per litre, so if excise tax was included in the price of diesel as it is in petrol, instead of Road User Charges, the retail price of diesel would be around $2.11 per litre.

• For more information, go to: www.aa.co.nz/aapetrolwatch

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