Petrol and diesel prices as at 30 April 2020

There appears to have been some upward movement in fuel prices – the first price change in 7 weeks – with observed prices in Wellington rising 2 cents per litre at the very end of April. But contrast that with Christchurch, where prices have been falling – at some brands 91 is below $1.50/litre.

Commodity prices have risen recently, with Brent crude oil now at US$31/barrel, while the landed cost of petrol and diesel has also increased, mostly due to a dramatic increase in the shipping cost which has doubled to nearly 12cpl (13cpl for diesel). By comparison, the shipping cost was around 4cpl for most of 2019. This cost has risen because tankers are in demand as floating storage due to the global drop in demand for fuel.

In mid-April the landed cost of petrol reached a low of 25cpl (40cpl for diesel where global demand has not fallen as much), but now the landed cost is 32cpl (diesel 41cpl).

Even so, in places like Wellington, not all of the recent drops in commodity prices were passed onto motorists, let alone the additional saving from a drop in the GST take. On that basis, margins at the so-called ‘national price’ remain high and pump prices really should not be on the increase in Wellington. It begs the question whether this is helping cross-subsidise the extraordinary low prices in Christchurch.

Petrol and diesel prices as at 30 April 2020
  National fuel price
91 Octane 196.9
Diesel 130.9

 

Petrol and diesel prices as at 22 April

Since 16 March there have been no further observed reductions in pump prices, but the commodity price of fuel has fallen further, with the landed cost of petrol dropping another 10 cents per litre (cpl) in the past month, and diesel 8cpl.

Since the start of the year, the petrol commodity price has fallen 52.5cpl when converted to NZ$, whilst the national price has fallen 46cpl. At the same time, the total GST take on petrol has fallen just over 5c since the beginning of the year, and this reduction has not been passed onto motorists either, so fuel company margins have risen.

That margin is based on the national price of $1.95/litre for 91 octane, so a caveat is that many parts of NZ have lower prices than that, and thus lower margins. In Christchurch for example, many service stations have prices under $1.70/litre, and elsewhere prices are under $1.80/litre, so arguably those prices reflect the full drop in commodity prices and tax, whereas there is clearly scope for prices in other places like Wellington, where they’re above $1.90, to fall further.

With the large drop in global commodity prices, the cost of refined petrol now makes up just 25cpl of the pump price, whereas at the start of the year it was 77cpl. But the diesel commodity price has not fallen as much, and now makes up 41cpl (so 64% higher than petrol), compared to 84cpl at the start of the year.

Despite the rapid drop in the price of US oil in the last few days, the relevant benchmark oil price for the rest of the world (Brent crude) has not fallen much and is in fact about the same as it was in mid-March (but had been rising in the interim).

Petrol and diesel prices as at 16 March 2020
  National fuel price
91 Octane 194.9
Diesel 128.9

 

 

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