13 Nov 2008

Petrol down, but other costs likely to rise

9:36 pm on 13 November 2008

Consumers are being warned the international economic downturn means they are unlikely to see flow-on benefits from lower fuel prices.

Shell, BP and Caltex dropped their petrol prices by 4 cents a litre on Thursday. Petrol now costs $1.53.9 per litre for 91 octane and $1.58.9 a litre for super. The price of diesel remains unchanged.

They say dropping global demand for oil is flowing through to decreases in the cost of refined product. Since July, petrol has dropped 65c a litre in New Zealand.

Demand in the United States, the world's largest consumer of oil, is expected to fall below 1 million barrels a day for the first time since 1980.

US crude, which peaked at more than $US147 a barrel in July, fell $US3.17 to settle at $US56.16 a barrel on Wednesday - its lowest settlement since January 2007.

Shell says the global demand for crude oil is falling and that is flowing through to a drop in the cost of refined product.

However, transport operators say despite the relief, the international economic situation means other costs, including maintenance, have continued to rise.

Road Transport Forum chief executive Tony Friedlander says overheads, including equipment and spare parts, represent a growing percentage of costs.

He says the cost of labour is also substantially higher than it was up to a year ago.

The Taxi Federation and the Bus and Coach Association say they are in a similar situation.

More reductions wanted

Meanwhile, a consumer watchdog is calling for further reductions at the petrol pumps.

Consumer New Zealand says petrol prices are still too high. A spokesperson, Hamish Wilson, says, converted to New Zealand dollars, Sydney prices were about $1.30 per litre on Tuesday.

However, the AA says that, based on crude prices and our exchange rate, petrol prices are about where they should be now.