18 Oct 2008

NZ oil companies cut prices

5:34 pm on 18 October 2008

Oil companies in New Zealand dropped petrol prices by 8 cents a litre on Friday, following concerns that plummeting crude prices were not being reflected at the pump.

But the Automobile Association, which monitors fuel prices, says motorists are not being ripped off.

Shell and BP cut their retail petrol prices by 8c a litre. Their price for 91 petrol is now $1.81.9 per litre. The retail price of 95 octane is $1.86.9 per litre.

The companies' diesel price was reduced by 6c a litre to $1.39.9 per litre.

Mobil has also dropped its prices, with a litre of unleaded petrol now $1.81.9c a litre and diesel $1.35.9c a litre.

US crude settled at $US69.85 on Thursday, down $US4.69, after sliding as low as $US68.57 - the lowest level since 27 June, 2007.

New Zealand oil companies have rejected suggestions that they should have matched the US crude prices sooner.

The companies say such criticism is unfair, because they do not import US crude. They say it ignores the impact of the falling exchange rate and the price of refined oil, which until Thursday, had remained high.

The lower petrol costs have prompted at least one airline to think about its fuel surcharges.

Qantas says it is reconsidering its fuel charges for flights booked in New Zealand.

Air New Zealand says it is still trying to recover the cost of jet fuel, which is 16% higher than a year ago, but has dropped some fares in the domestic market to stimulate demand.

However, taxi companies say a greater drop is needed before fares fall.

The Taxi Federation says it would take a drop closer to 50c before fares fall, thanks to the cost of licensing and insurance.

The Road Users Forum says the drop is welcomed but trucking companies are still being hurt by increases in capital costs.