Petrol price levels back to preCovid

AUCKLAND: The price of petrol is quickly moving toward levels last seen in March 2020.

Weekly fuel price monitoring data from the Ministry of Business, Innovation and Employment (MBIE) shows the price of regular petrol was sitting at $2.28 per litre for the week ended June 4, 2021.

This is the highest it has been since the price of petrol exceeded $2.28 per litre for the week ended March 6, 2020.

This steady price increase is also reflected in the cost of a litre of premium fuel, with that rising to $2.42 in the latest data. This is the highest level since the week ended February 21, 2020.

These figures put petrol prices on par with the high levels seen before the pandemic.

AA motoring affairs spokesman Mike Noon notes that fuel prices do, however, vary from region to region due to competition.

‘‘Prices have become increasingly variable between regions or even within towns and suburbs,’’ he said.

‘‘This makes a ‘national’ price figure less and less meaningful and often quite different to what motorists are experiencing at their local service stations.

‘‘For instance today we can see regular petrol at $2.07 at some sites in Wellington and $2.18 in Auckland, which includes the 11 cent regional fuel tax.

‘‘In the South Island pricing has become increasingly competitive and overall the premium that the South Island used to pay is not evident any more with prices around $2.05 at some sites today.’’

Global factors have also had a major impact on petrol prices over the last 18 months.

As Covid19 spread across the world, demand for oil dropped significantly as the need for transportation dropped with people confined to their homes.

This led to a massive drop in oil prices, with the price of crude sitting as low as $US18.43 ($NZ25.62) per barrel at one stage during the pandemic, according to the MBIE data.

With the rollout of vaccines and the steady relaxation of lockdown conditions, demand has returned and the price of oil has steadily increased.

This has had the knockon effect of steadily increasing prices at pumps. This week, the price of oil broke the $70 threshold for the first time since May 2019.

Oil analysts have noted that these increases come while the market is still depressed, given air travel has not come close to prepandemic levels.

As a greater number of airlines reintroduce routes, the demand for oil will only increase.

The Financial Times has reported that Opec and other large oil producers, which have been curtailing production during the pandemic due to the fall in demand, are starting to add barrels back to the market as consumption improves.

The Financial Times went on to note that given the continued uncertainty in the market, oil demand is likely to fluctuate in the coming year. —