Petrol down, but diesel up

Retail petrol and diesel prices moved in different directions during November. The price of petrol fell 3 cents per litre, to $2.07 per litre for 91 octane in the main centres, while the price of diesel rose 14 cents per litre to end the month on $1.61 per litre at most outlets.

“It’s unusual for petrol and diesel prices to move in opposite directions, but not unheard of,” says AA PetrolWatch spokesperson Mark Stockdale. “Most people equate retail prices to movements in oil prices or exchange rates, but that’s only part of the equation. The price of the fuel we buy at the pump is mostly based on the commodity price for that product – and petrol and diesel commodity prices can move independently of each other – and oil prices – as we have seen this month.”

According to AA PetrolWatch, the commodity price for diesel rose US$5 a barrel during November. By comparison, oil prices only rose US$2 a barrel by month end, while petrol commodity prices fell over US$12 a barrel.

Diesel commodity prices are rising as countries stockpile diesel for heating fuel in preparation for the northern hemisphere winter. At current commodity prices, if the same tax was levied on diesel at the pump as petrol, the retail price of diesel would be $2.25 per litre.

“During November, the NZ exchange rate lost 5 cents against the US dollar, compounding the increase in the cost of diesel, while the large drop in petrol commodity prices only translated to a 3 cent reduction in the imported cost, which was passed on at the pump,” says Mr Stockdale.

“However, the AA’s calculations show that the increase in the imported cost of diesel was about 8 cents per litre, so the 14 cent per litre price rise was presumptuous in our view. While the importer margin for diesel – retail prices less costs – was below average for much of the month, it is now well above average and the AA calls on the fuel companies to reverse the last 4 cent per litre increase,” Mr Stockdale said

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

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