Fuel ‘could be cheaper’

A near 2 per cent drop in the price of petrol will have motorists smiling, but transport bodies say diesel needs to fall further before consumers really start to benefit.

BP yesterday cut petrol prices by three cents a litre and diesel prices by 4c, taking pump costs to 209.2c a litre for 91 unleaded, and 150.9c a litre for diesel.

The move was quickly matched by the three other major fuel retailers to similar levels.

The price adjustments came as the New Zealand dollar recovered from a mild December dip to recently trade near US84c, and the cost of imported refined fuels eased.

On the face of it, the savings are not significant, amounting to $3.60 for a 90-litre tank of unleaded petrol.

But Road Transport Forum chief executive Ken Shirley said consumers would really benefit if oil companies cut their margins further.

Fuel costs are typically passed on to customers by transport firms, so a drop in the price of fuel could result in lower on-the-shelf prices.

‘‘Wholesale [diesel] margins have sat at 22 cents per litre for a long time, and that’s crept up to 30 cents a litre, and we are concerned about that,’’ Shirley said. ‘‘All that says is there is scope for oil companies to bring down prices further, especially with a strong currency.’’

Mark Stockdale of the Automobile Association said diesel prices were closely correlated to economic growth, and at the current level, it did not support user costs.

His position is backed by ANZ’s Truckometer index, a measure of heavy vehicle activity on 11 major roads. It fell 5.4 per cent in December, following two months of gains.

Mainfreight chief executive Don Braid said high fuel prices were the main reason the company was making more use of rail and coastal shipping services. The firm recently built a large freight handling depot on Wellington’s Aotea Quay to handle the transfer of freight between the rail and road networks.

The oil companies themselves insist they are passing on any savings to customers.

‘‘Chevron does not set the retail price of fuel across our service station network,’’ said spokesman Jeremy Clarke. ‘‘When the market moves or the cost of fuel products changes, we modify our wholesale prices accordingly.’’

Oil firms also noted that transport operators typically negotiated discounts based on volume.