AA Senior Policy Analyst Mark Stockdale says "it's been an awful month with Kiwi motorists hit by a double-whammy of rising imported petrol prices and a falling exchange rate.

While crude oil prices have remained low, international refined petrol prices have jumped more than 50 percent since the beginning of the year, or 70 percent when you factor in the effect of the falling New Zealand dollar over the same period. At the same time, although refined diesel prices rose over 20 percent earlier in the month, they soon fell back to December levels. The net effect of this being no change to the diesel pump price."

The increase in the cost of petrol reversed a six month trend that saw prices fall 86 cents since the highs of July 2008. By the end of January one litre of 91 octane petrol retailed for $1.63 in the main centres, while diesel prices remained unchanged from late December, on $1.04 per litre.

According to AA PetrolWatch, this time last year petrol was retailing for $1.71 per litre and diesel $1.26 per litre.

"That was at a time when global commodity prices were climbing sharply, yet our exchange rate was worth 24 cents more and so partially offset those high product costs. It's a perverse outcome that with lower interest rates Kiwis might be saving some money on mortgage payments, but at the same time our dollar is worth less and so the price of imported fuel rises," says Mr Stockdale.

Motorists concerned about LPG prices

Motorists are increasingly frustrated by the apparent slowness of LPG prices to fall compared to petrol. From July 2008 to the end of December, petrol prices fell 86 cents per litre or 39%, whereas LPG prices fell approximately 21 cents per litre or only 15%.

"LPG users are understandably unhappy but it's important to realise that LPG prices are set differently to petrol or diesel and there is no direct link between LPG prices and crude oil, petrol or diesel prices," says Mr Stockdale.

"Amongst other factors, LPG prices are fixed for one month in advance on the global commodity market and don't change until the following month, whereas oil, petrol and diesel prices are reviewed daily."

• More information on LPG is available on the AA website: www.aa.co.nz

For more information contact

Mark Stockdale
Senior Policy Analyst
New Zealand Automobile Association
T. +64 4 931 9986
M. +64 21 0220 4700
E. mstockdale@aa.co.nz

The New Zealand Automobile Association is an incorporated society with over one million members. It represents the interests of road users who collectively pay over $2 billion in taxes each year through fuels excise, road user charges and GST.