Oil price fall not showing at pump

NIKO KLOETEN
Last updated 16:18 08/07/2014

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A drop in the price of crude oil offers no relief to motorists stinging from recent petrol price hikes, the Automobile Association says.

Petrol prices were raised by 3 cents a litre to $2.24 a litre for 91 octane after an increase in petrol excise tax kicked in on Tuesday last week.

Only two weeks earlier petrol prices rose 2c a litre after an increase in the price of oil, as concerns mounted about the possible impact of the conflict in Iraq.

Brent crude oil surged to US$115 ($131) a barrel on June 19, the day petrol prices went up in New Zealand.

Since then, however, oil has fallen by more than 4 per cent to US$110 a barrel, including a 2 per cent fall in the last week alone.

But Mark Stockdale, spokesman for the Automobile Association's Petrolwatch, said this fall would not translate into cheaper prices at the pump.

While the cost of unrefined crude oil had gone down, the price of refined petrol had actually gone up by more than 2 per cent during that same period, to US$134 a barrel, Stockdale said.

"The commodity price for petrol has gone up and for that reason we don't expect reductions in petrol prices."

The rise of the New Zealand dollar, trading at about US87c, had largely negated the increase, Stockdale said.

But although the cost of refined petrol had increased in recent weeks, the cost of refined diesel had fallen by about $2 to US$129 a barrel, he said.

"The AA has been saying for some time that diesel prices are overpriced. We think there is room for them to move another 4c down."

Petrol prices are 3c off last year's all-time high of $2.27/l for 91 octane.

Adjusted for inflation, petrol was at its most expensive in 1981 when it sold for $2.40/l in today's dollars.

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