Petrol prices on the rise

Airlines also affected as oil price jumps

Global oil prices have hit their highest levels since 2015 this week as world supply is squeezed by pipeline problems and major producers are set to keep a check on production, pushing up prices for motorists this summer.

The impact of action by the Organisation of Petroleum Exporting (Opec) countries and non-Opec countries to keep up prices by limiting output is being felt around the world.

Petrol prices are over $2 for a litre of 91 unleaded petrol at many service stations around the country after rising steadily during the year.

Crude spiked earlier this week as Britain’s most important North Sea pipeline prepared to restart pumping after a rare shutdown and there were supply problems in Libya following an explosion.

International benchmark Brent crude rose US$1.81, ($2.56) or 2.8 per cent, to US$67.06 and US West Texas Intermediate crude futures jumped US$1.50, or 2.6 per cent, to US$59.97.

Prices have slipped slightly since then but analysts warn supply remains tight.

The Waha Oil pipeline that carries crude to Libya’s largest terminal will need about a week for repairs following an explosion on Tuesday, while the American Petroleum Institute report shows US crude stockpiles falling by 5.96 million barrels last week.

In this country the Government wants to know more about how petrol companies set prices and the Automobile Association says the fuel companies should be absorbing more of the oil price increase as margins were already high.

The latest AA Petrol watch monitor puts the national price of a litre of 91 at $2.10, a litre of 95 at $2.19 and $1.44 for a litre of diesel.

Spokesman Mark Stockdale said motorists were paying less than $2 a litre for 91 octane a year ago including some of the more expensive parts of the country including Wellington and the South Island.

“Motorists over this holiday season have not had the same welcome Christmas present that they had over the past couple of holiday seasons.”

Brent crude fell to below US$28 a barrel in early 2016 but has steadily recovered as Opec, which controls about 40 per cent of world production, and Russia agreed to slash production.

Price rises have not only hit motorists and ground transport operators, but also had an impact on airlines.

The price of jet fuel is 20 per cent higher than what it was a year ago and this will add an estimated US$28.3 billion to airlines’ bills this year.

Stockdale said any increase in crude price wasn’t welcome.

“There are global factors that are beyond the control of Kiwi motorists, beyond the control of the New Zealand Government and beyond the control of the fuel companies.”

But oil companies — which faced a price inquiry this year and will face more scrutiny next year — had room to avoid reacting to every rise in crude prices.

“We think they can afford to wear a little more of that rather than passing it all on,” said Stockdale.

The NZ dollar is at twomonth highs against the US currency — trading above US70c yesterday — and this would provide some insulation from price rises.

And analysts say that if oil continues to rally in the coming year this will bring more of the US shale oil industry back into play and that will pull down oil prices.

Auckland motorists face higher fuel bills next year regardless of global prices as a transport tax is imposed throughout the region.

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