Lower petrol prices match falls in commodity prices

Lower petrol prices match falls in commodity prices

Petrol pump prices fell 4 cents per litre during August, but there was no change in diesel prices. Excluding sites discounting pump prices, the cost of petrol at most service stations in the main centres ended the month on $2.18 per litre, with diesel unchanged at $1.48 per litre.

“The reduction in pump prices is mostly due to falling commodity prices. Petrol commodity prices fell US$14 a barrel to the lowest level since November 2013 but diesel commodity prices only fell US$3 a barrel in that time,” says AA PetrolWatch spokesperson Mark Stockdale.

Allowing for the 4 cent drop in the exchange rate during that time, the reduction in commodity prices meant the imported cost of petrol fell just over 6 cents per litre, while the cost of diesel only fell one cent.

“Last November we were paying $2.12 a litre for 91 octane while the exchange rate was about the same and the excise tax on fuel was 3 cents less. Unfortunately, commodity prices had started to rise by the end of August,” Mr Stockdale said.

According to AA PetrolWatch, some retailers increased petrol and diesel pump prices by 2 cents per litre on 1 September.

Recent movements also illustrate why changes in oil prices aren’t directly comparable with pump prices for fuel.

“The commodity price for petrol fell much more than oil and that’s the benchmark that influences the price Kiwis pay at the pump. Oil prices fell over 5 per cent in August but, if we were using that as a benchmark for pump prices, the drop would have been fully offset by the fall in the exchange rate,” Mr Stockdale added.

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