Fuel companies should absorb tax increase as prices rise

Media Release: 31 July 2012

PetrolWatch – July 2012

Fuel companies should absorb tax increase as prices rise again

After two months of falls, fuel prices are on the rise again with petrol increasing 14 cents per litre during July and diesel up 10 cents per litre.

The price of 91 octane petrol rose from $1.97 per litre to $2.11 per litre by month end in the main centres, with the price of diesel at most service stations finishing on $1.51 per litre.

“After crude oil prices fell to 18-month lows of US$88 a barrel in June, they then jumped 20 per cent during July,” says AA PetrolWatch spokesperson Mark Stockdale

“That resulted in a 17 per cent increase in refined petrol prices, which for motorists equated to a seven per cent increase in petrol pump prices.”

Fuel excise up 2 cents per litre

The AA is calling on fuel companies to not increase their prices tomorrow when the excise tax increases.

The excise tax on petrol is rising from 48.5 cents per litre to 50.5 cents per litre on August 1, with diesel Road User Charges (RUC) increasing by an equivalent amount.

“Although taxes are rising, the AA is calling on fuel companies not to increase retail prices. Our monitoring of commodity prices and importer margins shows last week’s petrol price rise of 3 cents per litre was unnecessary. Fuel companies can afford to absorb the tax increase,” says AA PetrolWatch spokesperson Mark Stockdale

“If the tax was not increasing, the AA would be calling for a price cut, and we believe diesel pump prices should be coming down anyway,” Mr Stockdale added.

The last increase in fuel excise was 3 cents per litre in 2010, with the government postponing a planned rise in 2011. Tomorrow’s increase means the average motorist will be paying $700 a year in excise.

All of the excise and RUC is spent on road maintenance, safety improvements, road building and public transport. Petrol vehicle owners contributed $1.45 billion in fuel excise in the last financial year while owners of light diesel vehicles paid $270m in RUC.

Total taxes on petrol, including ACC, are now 61.1 cents per litre, plus another 27.5 cents per litre in GST at current prices for 91 octane, with taxes making up 42 per cent of the retail price of petrol.

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

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