Global unrest factor in petrol price
Yesterday's drop in fuel prices was appropriate, given questionable increases last week, the Automobile Association says.
Z Energy dropped its petrol prices by 2 cents a litre and diesel by 4c, meaning a litre of 91-octane was now $2.179 and diesel $1.529.
Z cited the stronger New Zealand dollar and the falling cost of refined petrol and diesel on the international market as reasons for the drop.
BP said it had also dropped its prices.
An AA PetrolWatch spokesman, Mark Stockdale, questioned last week's petrol price rise of 3c a litre.
He said raising prices during the busy holiday period before cutting them a week later was difficult to justify. "Price cuts are appropriate. Diesel has also been overpriced for some time, so today's 4c a litre cut was overdue."
But Z Energy spokeswoman Christine Langdon said last week's price pump reflected refined petrol prices on international markets, which had been trending upwards for over a week prior to the increase.
"Some factors influencing that included unrest in South Sudan and Libya and strong economic data out of the United States."
Yesterday crude oil futures for February rose 22c to a high of US$107.11 a barrel, amid concerns oil from a recently restarted Libyan field might have difficulty reaching markets because of instability in Iraq.
Langdon said Z had been cautious regarding the timing of lowering diesel prices because diesel prices usually rose over summer as demand increased in the Northern Hemisphere during winter.
"We were slow to increase the price at the pump at the start of summer, when prices started trending up for the Northern winter, and this impacted our margins at the time."
Last month prices had risen to $2.169 for a litre of 91-octane and $1.569 for diesel, with a warning prices could lift higher as countries in the Northern Hemisphere stockpiled fuel for winter heating and electricity.
But Langdon said the anticipated demand increase had not happened to the same degree as previous years, which meant Z could reduce the price of diesel at the pump.
Yesterday's drop was mostly attributed to the dropping cost of refined petrol and diesel on the international market.
Falling costs combined with a stronger New Zealand dollar meant Z could now pass savings on to its customers, she said.
The kiwi traded at US82.97c yesterday morning, up from US82.16c at 5pm on Friday.
This week's petrol prices are about 8c a litre higher than the same time a year ago, while diesel is about 3c more expensive.
The current price is lower than last year's record high of $2.269 a litre in July.
The record price followed two months of increases and the New Zealand dollar was trading at about US77c at the time.
An industry rule of thumb suggests an US1c fall in the currency corresponds to a pump price rise of about 1c.