Transport sector, motorists welcome falling oil prices
Transport operators are welcoming a fall in petrol prices after crude oil prices tumbled overseas.
Z Energy and Caltex have lowered their fuel prices by 7 cents a litre for all grades of fuel, building on Z’s cut of up to 6c a litre across 90 per cent of its sites on Monday.
The move anticipates a decline in refined oil prices, which will not be clear until today, AA spokesman Mark Stockdale said.
‘‘We actually won’t know what the price of refined fuels is until tomorrow because they lag the crude price by a day,’’ he said. ‘‘But clearly prices are coming down in New Zealand and that’s what we would expect.
‘‘It’s worth noting that as of Friday, the commodity price is about double the oil price. So it’s fallen and it should continue to fall. But a barrel of petrol is worth a lot more than a barrel of oil at the moment.’’
A US$10 fall in the price of a barrel of crude equated to about 10c a litre at the pump, he said. National Road Carriers, which has about 1800 members with 16,000 trucks, said the fall in petrol prices was a silver lining at an uncertain time.
‘‘It’s going to be a definite saving, fuel is one of our biggest costs,’’ the group’s head, David Aitken, said.
‘‘It’s coming at a good time, given the issues we have out there.
‘‘Any business sector that is affected by this coronavirus ... affects the road transport sector because everything is delivered by trucks at some stage.’’
Nick Leggett, chief executive of the Road Transport Forum, agreed transport firms would be pleased.
‘‘Talking to oil industry experts, this could be quite sustained . . . Costs have been increasing significantly in other areas of the industry, without a corresponding increase in the rates that are able to be charged.
‘‘So any sustained reduction would be a welcome relief.’’
Crude oil prices fell more than 20 per cent after a fist fight developed between oil-producing countries over how much to cut production, as economies steel themselves for a coronavirus-led downturn.
Saudi Arabia cut its prices, starting a price war after Russia refused to roll back production in response to falling demand, sparking the sharpest decline on global oil markets since the Gulf War in 1991.
That led to a collapse in share prices of companies and businesses that service the oil and gas sector. Manufacturers and banks, which are sensitive to the economy, also tumbled.
‘‘People are very anxious and very uncertain. Then all of a sudden you throw in a wild card that we weren’t expecting and people just went, ‘Ah!’’’ said Randy Frederick, vice-president of trading & derivatives at Charles Schwab.
He added: ‘‘A recession and a bear market are both a very realistic possibility right now.’’