Fuel commentators predict prices could reach $3.00 per litre (p/l) for regular unleaded 91 in the not-too-distant future, but this would be reliant on some fairly significant shifts in some of the other figures behind the scenes.
The calculation of the consumer petrol price in New Zealand starts with the cost of oil per 159-litre barrel which is always quoted in $US and converted to $NZ using the exchange rate on any given day.
Various Government taxes and levies piled on top make up the lion's share of the price consumers pay at the pump and the rise and fall over time can mostly be attributed to changes in these taxes.
The latest rates for these taxes, obtained from the Ministry of Business, Innovation & Employment (MBIE) are:
| Type of tax | Tax amount per litre |
| National Land Transport Management Fund: for funding roads and infrastructure) |
70.02c |
| Accident Compensation Corporation (ACC) levy: towards the cost of accidents on public roads) |
6c |
| Petroleum Fuels Monitoring Levy | 0.59c |
| Local Authorities Petroleum Tax | 0.66c |
| Emissions Trading Scheme (ETS) Tax: the Government's main tool for reducing greenhouse gas emissions |
16.63c |
| Regional fuel tax (Auckland only) To fund transport projects in the Auckland region |
10c |
The other big tax, of course, is GST at 15%.
Local fuel retailers must also cover their overheads. This 'oil company component' equals the difference between the consumer pump price and the barrel price plus all the applicable Government taxes paid above.
The overheads include refining, domestic distribution and retailing costs and a portion of it is the fuel retailer's profit margin or around 3 to 5 cents p/l.
The below chart shows the variance in pump prices over time as well as the oil company component:
Oil and Petrol
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For kiwis to see price rises at the pump a number of adjustments further back in the equation would need to occur andcould include the following scenarios:
- A rise in the per-barrel price to US$100, as it is tipped to reach due to tightening supply and Omicron disruptions.
- The $NZ falling to 66USc: Westpac strategists said they had a 'trade idea' to sell the NZD at that rate.
- The ETS tax rising to 25c/pl: As per MBIE, it's risen from 9.96 c/pl in June 2021 to 16.63 c/pl currently, so a jump this size is is not out of the question.
Starting with the current per litre price of fuel, even if all three scenarios were piled on the price would still stop short of $3 per litre, even in Auckland.
The chart below shows the incremental impact of adding each scenario to the pump prices for Unleaded 91 in both Auckland and the rest of New Zealand.
Sometimes described as a 'grudge purchase,' and keenly monitored by many motorists, there are still some fairly significant changes we would need to bounce through before it's time to grumble about paying north of $3 at the pump.
| Price sensitivity per scenario | AKL U91 | change | NZ U91 |
| $/L | c/L | $/L | |
| current prices, per MBIE | $2.638 | $2.523 | |
| 1. if FX goes to 66 USc, price rises by | 1.59 | ||
| $2.654 | $2.539 | ||
| 2. if crude goes to US$100, price rises by | 22.24 | ||
| $2.876 | $2.761 | ||
| 3. if ETS goes to 25c/L, price rises by | 9.63 | ||
| $2.973 | $2.858 | ||
| Assuming: | |||
| Oil company component stays unchanged | |||
| Retail discounts from present unchanged | |||
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