Petrol cheapest for 14 months

Kiwis can look further afield for their holidays with another cut in the price of fuel taking a litre of petrol to its lowest point for the past year.

A fall of 5c a litre in petrol prices took 91 octane to $1.58, with 95 octane at $1.63. Diesel did not change.

The price is 61c a litre lower than petrol's high point in July and the lowest it has been in 14 months.

The 28 per cent drop from the record high point of $2.19 translates directly into savings, equating to about an extra 120 kilometres from a $50 tank of fuel in an average Toyota Corolla.

Automobile Association spokesman Mark Stockdale said the price of refined petrol had dropped steadily and petrol companies had dropped retail prices in line with it, keeping their importer margins largely constant.

There was no way to know how far the price could go, but at some point it would become unprofitable for the refineries.

"It's great news for motorists and how long it will continue we will have to wait and see."

Diesel had not had the same decreases because it was a staple requirement for industry. "You still need diesel to run an economy."

Demand for petrol was more volatile and responded more quickly to economic concerns, Mr Stockdale said.

The stability of the exchange rate between the New Zealand dollar and the US dollar - settled around US60c - was helping translate drops in international fuel price to the pumps.

The fight for margins at independent service stations remains tough. Most New Zealand service stations are company-run, but a few are in private ownership.

After 30 years in the industry, former Motor Trade Association president Chris Kirk-Burnnand sold his last petrol station in 2007 because he said the margins were uneconomic.

He said that, as petrol got cheaper, the percentage charged by banks and credit card companies was less and eroded less of the retailer's profit margin, which was fixed at about 4c per litre.

"It takes a bit of pressure off, but no one is making any money in this game."

He said that, as the oil companies set the price at the majority of service stations, the independent stations were obliged to follow to compete.

- © Fairfax NZ News