Transport operators warn of consumer goods price rises as diesel spikes up 44c a litre in one day

The cheapest unleaded 91 petrol in Auckland increased by 11c a litre in the past four days, according to fuel-tracking app Gaspy.

International oil prices remain under upward pressure as traffic in the Strait of Hormuz, through which 20% of the world’s crude oil is typically transported, dries up.

Smith said diesel was in higher demand because it is close in the refining process to jet fuel.

Reuters reported overnight that jet fuel prices in Singapore had increased by 72% to US$225.44 a barrel on Wednesday.

Smith said New Zealand brought in fuel as a refined product. He said the higher rise in diesel compared with petrol may be down to supply.

“We may have had a load of petrol already on the water. Nothing more complicated than diesel being on the wrong side of a line in the sand.

“Diesel also has use as heating oil etc, which is why we see diesel jump around more than petrol.”

He said it was likely Kiwis would see more cost increases as supply chains are impacted, including the prices of goods on supermarket shelves.

Smith said consumers should expect price increases for the “93% of all products that are delivered by truck”.

Retail NZ chief executive Carolyn Young said retailers have had a tough trading environment over several years and could not afford to absorb additional costs, particularly over a prolonged period.

“Higher prices are not what any of us want to see, but in such a tight economic environment, there is minimal ability for many business owners to cushion the impact of such a global crisis. It is inevitable that if this conflict continues for some time, some of those additional costs will have to flow through to the consumer.”

Mainfreight managing director Don Braid told RNZ this morning that New Zealanders could expect price increases to petrol, diesel, freight and international travel in coming weeks.

“We are being told to expect further increases in terms of diesel and that will be impacting our operations around the world, unfortunately we will have to pass that through.”

The longer-term worry would be if the war in the Middle East did not end quickly, he said.

Asked whether he had confidence in New Zealand’s fuel supply situation, Braid said the closing of Marsden Point refinery meant New Zealand had to rely on other countries.

“Jet fuel, I think, is 24 days that is being held currently, those are the things we wouldn’t want to see become an issue. So yes, it worries us, but we’ve been able to get through all sorts of other catastrophes and events of late, so we’ll have our fingers crossed and just get on and do the job,” he said.

“We are being told by those fuel companies that we shouldn’t worry about supplies, so therefore I don’t see a need for panic but I do expect us to see an increase in pricing.”

Earlier this week, Infometrics chief forecaster Gareth Kiernan told the Herald he expected retail fuel prices to climb 20-30c over the next couple of weeks, if current international oil price rises were sustained.

Economists from Westpac explained in a research note that a US$10 increase in the price of oil adds about 11c/litre to domestic pump prices (assuming no change in the NZ dollar).

“At current levels, the combined impact of higher oil prices and refining margins could see pump prices for 91 unleaded rising to around $2.85/litre. If sustained, that would directly add around 0.5 [percentage points] to annual inflation this year.”

Prices for Brent crude oil have lifted substantially, with Westpac’s economist noting the downstream impact.

“The increase in the price of refined petroleum has been even larger, with refiners’ margins also widening as usually happens when crises trigger worries about refinery capacity.”

Depending on how wide the conflict spreads and how long it lasts, oil prices could rise to anything from US$100 a barrel to US$185, Westpac said.

A BP New Zealand spokesperson said the company was monitoring the situation closely.

“There are a number of factors that influence prices. We continue to review bp Connect prices every day to ensure competitiveness in the market,” the spokesperson said.

“The bp website has more information on the facts about fuel pricing. There are also a number of independent bp operators all around the country who set their own prices and manage their own operations.”

A spokesperson for Gull echoed a similar sentiment and said carriers were busy catching up after a discount day on Thursday.

“Demand for fuel is high across the industry at the moment so understandably there is pressure on logistics,” the spokesperson said.

Z Energy said it was monitoring the evolving situation, but said at this stage there were no impacts on its ability to source fuel.

“As part of the Ampol Group, Z benefits from a diversified and resilient supply chain, supported by refining capability, multiple international sourcing options, and robust critical infrastructure. This gives us confidence in our ability to maintain safe, secure and reliable supply to our customers,” a spokesman said.

“We will continue to actively monitor developments, assess any implications, and provide further updates as appropriate.”

The Government recently put in place stock holding obligations that require fuel importers to hold 21 days’ worth of diesel, 24 days of jet fuel and 28 days of petrol.

The Government is also increasing the diesel storage requirement to 28 days, starting from 2028.

Channel Infrastructure chief executive Rob Buchanan said much of New Zealand’s imported fuel comes from Asian refineries.

“If you step back from it, the Government put in place those minimum stockholding obligations for a really good reason,” Buchanan said.

“They should give folks comfort that there’s a minimum amount of product in the New Zealand market at any given point in time for exactly these types of situations.”

About 40% of New Zealand’s transport fuel goes through Channel’s jetty. It has a significant storage capacity of 300 million litres after it added 100 million litres in 2023.

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.