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Expect queues at the pump today. Kiwis are being warned to top up their vehicles as soon as possible, as petrol prices are about to skyrocket.
Hamilton-based fuel supplier Waitomo Group has said that ‘unprecedented price increases’ internationally are having an impact on local prices, and that petrol is about to get even more expensive.
Managing director, Jimmy Ormsby, says “today, we’ve been advised by our supplier that prices are increasing, with the biggest single jump in our wholesale price seen in my time.”
“Despite keeping our own costs as low as we can, so we can deliver the fairest pump prices while ensuring we remain sustainable ourselves, we can’t absorb all that rise ourselves – so pump prices are going to have to respond.”
“A jump of this level is going to hurt motorists and businesses big time, so as a Kiwi business, we’re doing everything we can to minimise that pain, including forewarning our customers.”
“Get in now, fill up as much as you can. We will supply as much as we can at the lower price until 6pm, but from then on, prices will start climbing, reflecting the unprecedented price increase we’ve received.”
Ormsby said that the company is holding off raising its prices for as long as possible, but it will inevitably have to respond to the international price increases.
Ormsby said continued uncertainty over the Ukraine crisis and the ban on Russian fuel by the US and the UK had reverberated across the market, leading to crude oil prices rising to levels not seen since 2008.
He acknowledged that this will not come as welcome news to many Kiwis who are already struggling with the increased cost of living.
“The impact for Kiwis that can least afford it is what keeps me up at night. We’d not be living up to our Waitomo values if we didn’t do what we could to help.”
“High fuel prices – like grocery prices, and housing prices – are part of the cost-of-living crisis, hitting Kiwis who least can afford it. Come spend a few hours pumping gas with me to get a good taste of how tough it is for many Kiwis just trying to put food on the table,” Ormsby said.
AA principal policy adviser Terry Collins said extreme volatility in the oil market was making it difficult for importers to pick when to buy.
Prices have fluctuated wildly over the past week, rising to more than US$130 per barrel before dropping back down to around US$109.
Collins attributes the big drop this week to United Arab Emirates increasing production off the back of the unrest in Ukraine.
Collins noted while this kind of volatility would be shorter term, he said the shift in European geopolitics would also have a longer-term impact on fuel prices.
With European nations breaking ties with Europe, they will be forced to source their fuel from the same markets New Zealand relies on for its oil. This in turn means prices will continue to steadily increase in the coming years.
Collins previously predicted petrol prices to exceed $3 per litre and he has taken that a step further now, saying it’s possible fuel could reach $4 a litre.
He says that may not happen this year, but the shifting demand in Europe will place upward pressure on the market.
“I don’t think people fully realise the long-term impact this conflict will have,” Collins said.
Trends charted by fuel price app Gaspy show average fuel prices have risen from around $1.85 in May 2020 to almost $3 on March 9 this year for 91. Over the same time, the price of 98 has risen from around $2.10 to more than $3.25.
The Gaspy data shows a particularly big spike over the past few days.
New Zealand isn’t the only country to be struggling with a massive increase in fuel prices; the impact is being felt around the world.
There is, however, a marked difference between the prices in Australia and New Zealand.
Headlines across the ditch earlier this week bemoaned the possibility of the price of fuel rising to A$2.50 (NZ$2.68). Prices were sitting at A$2.20 (NZ$2.36) in Sydney and A$2 (NZ$2.14) in Melbourne.
Asked why there was such a massive difference between the price of fuel in Australia and New Zealand, Collins said tax was the single biggest contributing factor.
While Australian fuel prices include a tax contribution of 37 per cent, the New Zealand price carries 45 per cent.
Collins noted this has a significant impact on the final price that Kiwis pay at the pump.
Other factors impacting the price difference, according to Collins, include the slightly stronger Australian dollar and the country’s closer proximity to the oil market.
However, Collins stressed the tax mix was the biggest contributing factor.
Ormsby says the company will raise its prices at 6pm tonight.
“We’ve tightened our belts, kept our overheads and operating costs as low as we can, but we can’t continue to absorb everything passed on to us by our suppliers or Government.”
“That’s why we’re warning our customers of the window of opportunity before 6pm – it’s the fairest we can offer.”
The NZ Herald has approached other petrol companies to see if they will be raising their prices too.
Keyword: Expect queues at the pump, motorists warned petrol prices about to skyrocket