$2.10 a litre within days
By JAMES WEIR - The Dominion Post | Monday, 09 June 2008
Drivers are staring down the barrel of at least a 10c a litre rise in the price of petrol after a huge leap in crude oil to new highs.
Petrol companies are expected to look at lifting their prices again today, just a couple of weeks after the last rise took 91 octane to a record $2 a litre.
Crude oil jumped a whopping 9 per cent at the weekend, hitting US$139 a barrel with some market watchers tipping a rise to US$150 a barrel by early next month.
It rose about US$16 in just two days and was called "eye-popping" by international analysts.
Making things worse, the New Zealand dollar has fallen in the past week, adding to the pressure for petrol prices to rise here.
The latest rise came after suggestions by Israel that an attack on Iran's nuclear sites looked "unavoidable".
Petrol company Gull NZ general manager Dave Bodger said they would be looking "very hard" at prices today, and if refined product prices went up as much as crude, that would be reflected at the pump.
"If crude is up US$10 to US$12 a barrel, then very likely refined prices will follow (translating to) 10c to 12c a litre," Mr Bodger said.
Westpac Bank chief economist Brendan O'Donovan said, based on a Dubai price of around US$136 a barrel and the present exchange rate, prices could head for about $2.19 a litre. "It is anyone's guess where prices will go."
But he stressed that this was a "guesstimate", and that oil prices might not stay high.
AA Motoring Affairs general manager Mike Noon called on petrol companies to hold off on price increases as long as possible because the crude price "may move down again" after the spike.
AA has previously advised motorists to shop around and boycott companies that move first to raise prices.
The price increases would cost drivers hundreds of dollars more a year, and some trips had to be done with a car, rather than by bike or public transport, Mr Noon said.
Mr Bodger said each US1c fall in the Kiwi dollar would also add NZ1c a litre at the pump.
The Kiwi was down about US2c last week to around US76.7c, adding to the pressure on petrol prices.
If the dollar fell to the low US70c range, that would be "real tough for the motorist" Mr Bodger said, saying that this could push petrol to more than $2.30 a litre.
Though there had not been a noticeable drop in demand, other than the usual winter slowdown, he expected more people to think about buying bikes, or motorcycles or to trade down to smaller cars, and "walk the kids to school".
A spokeswoman for BP said there had been no price change yesterday, but prices would be reviewed today.
"We don't change prices based on one day's trading (in crude oil)," she said.
A Shell spokeswoman said they had never seen a near US$11-a-barrel overnight hike, so the company would "watch and see".
Shell would look at prices today.
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