NZ petrol prices well above global average

Sunday, 2 June 2019, 4:37 pm
Article: NZ Energy and Environment Business Week

NZ petrol prices well above global average but remain below the highest

First published in Energy and Environment on May 23, 2019.

The latest International Agency data on international petrol prices shows NZ is well above the international average, but not in the top range of the highest prices around the word.

The IEA World Energy Database says in 2018, the global average price of gasoline was 0.97 US dollar per litre (USD/l), a 14% increase compared to the previous year.

NZ’s average price was at 1.55 USD/l in 2018 up from around 1.45 USD/l in 2017 (IEA graph below). Prices varied greatly across countries: from 0.33 USD/l in Algeria to over five times that amount in Norway (1.91 USD/l). The IEA says both countries are crude oil exporters, and the price difference between them is mainly determined by national policy decisions. Government policy - in the form of taxes and/or subsidies – strongly influences how prices at the pump vary around the world. In general, European consumers pay the highest gasoline prices, generally reflecting high taxes on fuels. At the other end of the spectrum, the lowest prices are found among countries that subsidise liquid fuels.

In general, European consumers pay the highest gasoline prices, generally reflecting high taxes on fuels. At the other end of the spectrum, the lowest prices are found among countries that subsidise liquid fuels.

In recent years, automotive diesel and gasoline prices have tracked movements in crude oil prices. Global pump prices are, on average, significantly higher than the underlying crude spot prices as they also reflect transformation, transport and marketing costs, as well as taxes levied on fuel sales.

Tax makes up a large part of the final price in NZ and other countries with prices above the average.

There will be a focus on petrol prices in the coming week with the upcoming anniversary of the imposition of the 11.5 cents regional fuel tax in Auckland.

Petrol price watchdog Gaspy pointed to average retail prices in Auckland still being lower than many parts of the country.

Gaspy calculated the average price of 91 in Auckland to be $2.25 a litre; $2.29 in Wellington; $2.30 in Otago and $2.32 in Canterbury.

The West Coast was the most expensive place in mainland NZ, averaging $2.35. Taranaki and Bay of Plenty were the cheapest at $2.11.

It is impossible to tell if the price in Auckland would be lower without the tax. The Commerce Commission fuel market study is looking into whether petrol companies are inflating prices in areas to subsidise charging lower prices elsewhere. Previous studies have shown retail petrol prices are driven by the cost of transporting fuel and the scale of the market at the point of distribution. However, another obvious driver is the presence of cut-price retailers in some regions driving down the pump price.

First published in Energy and Environment on May 23, 2019.

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