Petrol prices not that bad
Motorists hurting as petrol prices hit record levels should spare a thought for their counterparts 30 years ago.
Back in 1981, the price at the pump was under 60c a litre.
Canterbury University economics lecturer Eric Crampton said that while that might sound wonderful, when adjusted for inflation it was the equivalent of $2.46 per litre in today's terms.
''While petrol prices have increased substantially recently, they are not hitting ranges where I would expect substantial adverse consequences," he said.
"Also people now buy cars that are far more efficient than the ones available even a decade ago, so the cost of driving per kilometre has not risen as substantially as the price rise in petrol over the last few decades."
If petrol prices continued to increase substantially due to global economic growth, that could have significant consumer effect, but that would be offset by growth in export markets, Crampton said.
''People get very excited about petrol prices because they see them every day while driving. I'm far more worried about inflation in housing costs in Christchurch."
The AA noted this week that petrol price rises to just under $2.23c a litre for 91-octane were 1c above the previous record hit in May 2011.
Crampton said the impact of rising petrol prices depended on the speed of the increase.
People could adjust to even a 50 per cent rise in the real price, if it were to happen over a long enough period, he said.
He would not be drawn on how fast would be too fast.
- © Fairfax NZ News