Petrol prices down even more. But why are dependent products not cheaper?

Get ready to pay a dollar sixty-something a liter, or even a dollar fifty-something at highly discounted locations.  Diesel?  Under a buck.

Petrol and diesel prices have been cut by another 2 cents.

It’s the fourth price cut this week – and the 19th since the start of October – and some stations are now selling diesel for under $1 per litre.

Diesel prices haven’t been this low since 2009 and motorists are lapping the prices up.

There are stations in the Bay of Plenty selling diesel for under 94 cents a litre, as world oil prices plunge.

The fall in the price of oil is going to have impacts beyond just the pumps, it’s going to have an effect on interest rates here in New Zealand.

That’s because lower fuel prices will reduce inflation and that means less reason for the Reserve Bank to hike interest rates.

“I think from the Reserve Bank’s perspective they are likely to stay where they are for a very long time,” says BNZ economist Stephen Toplis.

The lower oil prices will make the Reserve Bank’s job more difficult.  Usually if inflation were easing it would cut rates, but it can’t do that with house prices rising in Auckland and Christchurch.

“In New Zealand’s case the economy is ticking along quite nicely, the housing market looks like it is going to go gang busters again – the last thing you want to do is lower interest rates. The flip side of that is there is no way you can increase them when you have got no inflation,” says Mr Toplis.

Something else that might not change for a while is air fares – despite aviation fuel falling around 45 percent in price.

Air New Zealand says it hedges the fuel price – meaning it pays a fixed amount in advance to avoid any nasty surprises.

What other products and services should be under pressure for price reductions?

It appears everyone is enjoying the extra money in the pocket.

– 3 News

 


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  • conwaycaptain

    Airlines and Shipping Cos have forward cover for their fuel supplies so that can work on a set price.
    You will find that some of these contracts are at least 12 months long so they could well be paying a higher price than “at the pumps” so to speak.

    • peterwn

      And Maersk got into the oil business itself as a hedge.

  • jcpry

    I’m waiting for Auckland train fares to drop. How else is Red Len going to get the numbers up to make his train set a reality. The last thing that he would have wanted.

    • peterwn

      If they were dropped because of the price of diesel, they would need to be increased again within months as the diesel locos and units are phased out.

      • jcpry

        Aren’t all energy prices somewhat linked?

  • Murray Smith

    We as consumers , are at the bottom of the chain. Mostly rust and dirt down this end.

  • armotur

    Waiting for taxi prices to drop! Decided not to hold my breath on that though!
    As usual suppliers will make money from this, the consumer just keeps paying!

    • Hard1

      Aren’t a lot of taxis running on cheaper LPG anyway?

      • EX RNZN RM1

        Taxis drivers have worked out it is even cheaper with a “Blue F….en Prius” (Copywrite Walter)
        Talking to clients it goes Petrol Diesel ( even after RUC’s) LPG and the the lowest cost per km is Hybrid, around the city that is.

  • Korau

    Deflation is looming, according to the BNZ economists.
    Full story here http://www.stuff.co.nz/business/industries/64765449/deflation-looms-as-oil-price-falls .

    No inflation along with all the other positive economic indicators. Is this another nail in the leadership coffin of angry Andy?

  • dumbshit

    not holding my breath waiting for a drop in electricity supply prices either, they have to keep them high to subsidise wussels wind-mills

  • HSV325

    Freight companies and couriers however there will be some feeble excuse why they can’t drop prices

    • Jafarma

      Yeah, and I can’t see them or taxis being able to use the ‘we hedge fuel prices’ approach that Air NZ has taken

    • Yeahright

      Freight companies have a additional fuel surcharge they vary, I will keep a eye out if this changes……..I won’t hold my breath!

    • Teletubby

      Freight companies are dropping their publicly listed Fuel Adjustment Factor although not at the same rate they have increased them. The freight industry in NZ is extremely competitive and operates and very small margins so I would imagine the industry ids taking the opportunity to make a bit of hay while the sun is shining. Having said that freight companies tupically make 80% or more of their turnover from 10% of their customers and those bigger customers do not pay the publicly listed amount but have a contractor arrangement that will be linked to one of the fuel pricing indexes so the freight companies have no option to drop their FAF rate to those customers at the same rate they increased them.

  • Ratchette

    I wait for Auckland’s excuse for a Mayor to reduce bus fares & encourage people onto public transport.
    I guess I will be wasting my time.

  • Warren Murray

    Someone in the oil industry is making some good money at the moment. Looking at interest.co.nz, you can look back to early 2009, when the global financial crisis was hitting the world economy for when oil prices were at current levels. The price of petrol then was around 30 cents a litre less than it is now.

    The oil companies weren’t going bankrupt then, so why is petrol and diesel so high now? Accepting that the blessed government has slapped extra taxes on fuel and increased GST (which for fuel results in a tax on top of a tax), there seems considerable scope for further reductions. I reckon retail fuel prices should be 20-25 cents a litre less than where they are sitting now.

    As others have noted, when oil goes up, retail prices follow very quickly. Accepting that hedging might result in something of a delay, I still feel like I’m being ripped off.

  • LabTested

    I filled up at Gull on Tuesday. Because I spent over $30 they gave me a voucher for $3 off next time I spend $30 or more at the pump. Promotion ends 31/1. Only valid at manned stations.

  • Teletubby

    Tyres are a product that should be falling. Making an average car tyre uses about 12 litres of crude oil. Tyre prices have increased significantly as a result of oil price increases, it will be interesting to see how much they go down.

  • Aucky

    I have to support Air New Zealand’s claim regarding the fact that there can be no immediate lowering of their fares. The airline is well known for its skills in forward hedging which has kept the negative impact of rising fuel costs over recent years to an absolute minimum. What was slow to go up is equally slow to come down. Fuel represents about 30% of an airline’s operating costs.

  • grumpy

    Pump margins are now over twice what hey were just a few years ago. Sydney petrol now under $1 a liter. UK prices now close to our’s. We are getting ripped off still.

  • viking

    So, Z in Rotorua today 1.69 Yesterday 1.73 and Tauranga 1.83
    Filling in Rotorua today saved me 7.00 odd dollars.
    average fill is about the 50 liters according to Z. So from 2.30 to 1.69 means an average money in the pocket saving of about $30.00.
    Bloody good wage rise for everyone.

  • Jax

    The ripoff merchants at Fullers Ferries – time and time again they rose prices due to fuel even going so far to say it was like 60% or more of their costs – where a single return ticket to Waiheke is costing best part of $40 a massive rise – so where is the reduction – diesel has dropped dramatically faster than it went up – and the moved so fast to up the price every time it rose.. I very much doubt a tin pot player with a few ferries was hedged in any major way – and if they were why did they keep increasing prices.

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