Despite record petrol prices, drivers are paying less at the pump in real terms than three decades ago, a Canterbury University academic says.

On Tuesday, Z Energy raised the price of 91 octane by 3c a litre to just under $2.23 and the price of diesel by 3c to just under $1.57.

The Automobile Association said the change meant petrol prices were now 1c above the last record, in May 2011. Diesel, at $1.56 a litre, was still some way off the 2008 record of $1.92 a litre.

The rise caused grumbling by many Cantabrians, but senior economics lecturer Eric Crampton said petrol was more expensive in 1981.

"Back then, petrol prices were less than 60c a litre. While that sounds wonderful, when you adjust for inflation, that is $2.46 per litre in today's dollars - much more than we are paying now," he said.

"While petrol prices have increased substantially recently, they are not hitting ranges where I would expect substantial adverse consequences.

"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."

Crampton said if petrol prices continued to increase it could have significant consumer effects, but that would be offset by growth in export markets. "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," he said.

Z Carlton Corner manager Urzula Ploszaj said people had been complaining about the price rise.

"We do have customers complaining that it's gone up and seeing other places are cheaper," she said.

"We're the first to go up now, so it's worse, whereas when someone else rises first they come here. It's not good for us; we get a bad reputation. Everyone rises eventually."

Canterbury University professor Simon Kingham thought the rise in fuel prices provided the perfect opportunity for people to use a cheaper alternative that also "improves their health and reduces pollution".

"Previous behaviour change when fuel prices increase shows that people travel by car less to save money," he said.

"Increases in the use of the bicycle have been seen in such situations. The good thing about biking is that it is actually something people like."

Z Moorhouse manager Mukul Kumar said people had not changed their fuelling habits because of the price rise.

"We do have people complain. We always have people complain, but most people understand it happens. They still fill up a tank."

- © Fairfax NZ News

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