The rising cost of crude oil is driving up petrol prices amid a three-month relief period when Kiwis are supposed to be enjoying cheaper fuel prices.
Sweeping changes to ease the price of transport were rolled out in March, the Government slashing fuel taxes and halving the cost of public transport for three months as the price at the pump skyrocketed.
Now fuel prices are creeping up again - but not because fuel companies are trying to increase their profits.
Retail energy price data website Globalpetrolprices.com shows New Zealand sitting at the higher end of global fuel prices.
The minister says the price of crude oil is driving up the cost at the pump. (Source: 1News)
Terry Collins, spokesperson for the Automobile Association (AA), told 1News it's a perfect storm driven by EU sanctions on Russian oil, high international margins and increased demand as Covid restrictions ease internationally.
"Internationally, petrol demand will go up as Europe and the US start travelling over their holiday season."
He says the international shortage of diesel is a crisis also affecting Europe.
Collins says the "virtuous" actions of sanctioning Russia also mean supplies will dwindle across the globe, including New Zealand.
And although our supply of crude oil comes from Singapore, it's costing more because of high demand and less supply.
Energy Minister Megan Woods acknowledged rising crude oil prices are driving up the cost of fuel, but said on Thursday that "margins are staying low".
Collins agreed, saying petrol companies are doing their best to keep prices down.
"They are not the villains here, and they are not taking excessive margins."
Collins says he doesn't see any immediate end to rising fuel prices and estimates Kiwis will be paying "at best" about $3 a litre.
"It’s going to be a real problem for our Government when this three months ends."
Collins expects significant demand for electric cars but a shortage of supply.
"The unfortunate part is that Ukraine has half the mineral material resources to make silicone chips needed to make electric batteries, so the industry will be constrained by supply issues."
Asked on Friday if the Government would consider extending the three months of relief at the pump, Prime Minister Jacinda Ardern said she didn't know.
The PM said she will review the decision in several months. (Source: 1News)
"We are in such an uncertain environment at the moment - we can see globally the impact that the Ukraine war is having on fuel prices and the way that's impacted people at the pump.
She said the fuel reductions were put in place to ease some of that impact on New Zealanders.
“We put it down for three months as we did the 50% discount on public transport because of 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 these short-term measures try and ease that pressure for now.
“We will look to where we are in several months' time."
EU sanctions bite back
On Wednesday the EU said it wanted to stop buying refined oil from Russia - the second-largest producer of crude oil.
European Commission President Ursula von der Leyen, addressing the European Parliament in Strasbourg, France, proposed having EU member nations phase out imports of crude oil within six months and refined products by the end of the year, the Associated Press reported.
"We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimizes the impact on global markets," von der Leyen said.
The move must be approved by all 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 over President Vladimir Putin's invasion of Ukraine.
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