Petrol price fall likely temporary - AA

JAMES WEIR
Last updated 05:00 24/10/2012
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Petrol prices are coming down, with BP and Z Energy trimming 3 cents a litre.

But the Automobile Association warns that drivers should plan for prices to rise.

As world refined petrol prices dropped and crude oil fell to a three-week low, petrol companies in New Zealand cut the price of 91 unleaded to $2.14.9 cents, and 95 to $2.22.9 a litre.

In August, the price of 91 octane hit a record $2.23 a litre, topping the previous peak seen in May last year.

Announcing yesterday's 3c-a-litre cut, BP managing director Matt Elliott said: "Slowing economic growth around the globe has reduced oil demand and driven the prices downwards."

But the Automobile Association is warning drivers that they should not assume petrol will stay at current levels.

Fuel prices were likely to rise as the world economy recovered, and if the New Zealand dollar fell, motorists could be hit by a "double whammy".

With a high New Zealand currency and low interest rates, there had never been a better time to upgrade to a newer, more fuel-efficient car, AA said.

AA principal adviser Mark Stockdale said the 3c-a-litre cut was "entirely justified".

"They have been quick to pass it on," he said.

"But we do need to accept the long-term trend is for commodity prices to rise."

The shaky global economy was keeping a lid on prices. But if world economies did take off, Mr Stockdale expected fuel prices to rise at a faster rate than in the past few years.

"The real concern is that if overseas economies recover faster than New Zealand's, then fuel commodity prices could rise when our dollar drops.

"That's going to be a double-whammy effect, which will hurt motorists in ways we haven't seen yet."

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- BusinessDay.co.nz

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