The rising cost of crude oil is driving up petrol prices amid a three-month relief period during which Kiwis are expected to benefit from cheaper fuel prices.
Sweeping changes to ease the price of transport were put in place in March, with the government cutting fuel taxes and halving the cost of public transport for three months as prices at the pump soared.
Today, fuel prices are rising again – but not because oil companies are trying to increase their profits.
The retail energy price data website Globalpetrolprices.com shows that New Zealand is at the higher end of world fuel prices.
Terry Collins, spokesman for the Automobile Association (AA), told 1News it’s a perfect storm brought on by EU sanctions on Russian oil, high international margins and demand. heightened as Covid restrictions ease globally.
“Internationally, gasoline demand will increase as Europe and the United States begin to travel during the holiday season.”
He says the international diesel shortage is a crisis that also affects Europe.
Collins says “virtuous” actions to sanction Russia also mean supplies will dwindle around the world, including New Zealand.
And although our crude oil supply comes from Singapore, it costs more due to high demand and less supply.
Energy Minister Megan Woods acknowledged that rising crude oil prices are driving up the cost of fuel, but said Thursday that “margins remain tight.”
Collins agreed, saying oil companies were doing their best to keep prices low.
“They’re not the bad guys here, and they don’t take excessive margins.”
Collins says he sees no immediate end to rising fuel prices and estimates Kiwis will pay “at best” around $3 a litre.
“It’s going to be a real problem for our government at the end of these three months.”
Collins expects strong demand for electric cars but a shortage of supply.
“The unfortunate thing is that Ukraine has half of the mineral resources needed to manufacture silicon chips needed to manufacture electric batteries, so the industry will be constrained by supply issues. “
Asked on Friday whether the government would consider extending the three-month relief at the pump, Prime Minister Jacinda Ardern said she did not know.
“We’re in such an uncertain environment right now – we can see globally the impact the war in Ukraine is having on fuel prices and how it’s affected people at the pumps.
She said the fuel cuts were put in place to mitigate some of that impact on New Zealanders.
“We postponed it for three months as we did the 50% reduction on public transport due to the uncertainty that exists. We just don’t know what the future holds for this war and the impact it will have on us, but we hope that these short-term measures will attempt to alleviate this pressure for the time being.
“We’ll see where we are in a few months.”
EU sanctions hit back
On Wednesday, the EU said it wanted to stop buying refined oil from Russia, the second-largest crude oil producer.
European Commission President Ursula von der Leyen, addressing the European Parliament in Strasbourg, France, proposed that EU member countries phase out imports of crude oil within six months and refined oil products. ‘by the end of the year, reported the Associated Press.
“We will ensure that Russian oil is phased out in an orderly manner, in a way that allows us and our partners to secure alternative supply routes and minimize the impact on global markets,” von der said. Leyen.
This decision must be approved by the 27 member countries, which will be a battle because some are more dependent on Russian oil than others.
Across Europe, rising energy prices are testing the resolve of ordinary consumers and business owners who are caught between the continent’s dependence on cheap Russian energy and its revulsion in the face of President Vladimir Putin’s invasion of Ukraine.