AA says get used to it as petrol hits $2 a litre

HAMISH RUTHERFORD
Last updated 05:00 18/02/2011

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Get used to paying $2 a litre for petrol, the Automobile Association is telling motorists as fuel prices hit another two-year high.

All of New Zealand's main fuel retailers have raised the pump price of 91 octane petrol by 3 cents a litre, to $2.02.9 at most stations.

It is the first time that regular-grade petrol has breached the $2 mark since 2008, when it peaked at almost $2.20. Diesel prices rose 2c a litre.

AA spokesman Mark Stockdale said fuel prices were kept down last year by the global recession, but prices were expected to increase further as the world economy picked up.

"Last year it was $1.80 [a litre] and people got used to it. This year it's probably going to be $2-something, it's unlikely to drop and it may increase slightly."

According to the AA, at $2 a litre, it costs between $120 and $140 to fill an average-sized car, about $20 more than a year ago.

Rather than waiting for prices to drop, motorists should change their driving behaviour. The AA says that by driving smoothly, pumping up tyres and closing car windows, fuel consumption can be cut by 30 per cent.

"The average motorist cannot do anything to stop the Egyptian crisis pushing up oil prices, but they can reduce the amount of fuel they use," Mr Stockdale said.

Brent crude, the leading oil benchmark, rose to US$105 a barrel yesterday, amid fears of supply disruptions in the Middle East.

Meanwhile, the New Zealand dollar dropped to just over US75c after a warning that New Zealand's big banks face credit rating downgrades.

Since the end of September, the price of regular petrol has risen 29 cents a litre, or 16.7 per cent, an increase that will raise inflation.

High inflation, which is expected to peak at 5 per cent this year, could prompt the Reserve Bank to raise interest rates. At present, economists expect the official cash rate to be left on hold until about September.

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- BusinessDay.co.nz

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