Petrol below $2 'sign of downward trend'

Friday, 16 November 2018

Waitomo Group are set to open a new competitively priced petrol station in Wellington. (First published October 18, 2018).

Hamilton-based fuel supplier Waitomo Group is dropping its fuel prices to less than $2 a litre for unleaded petrol for a week.

Until midday on November 23, Waitomo is selling Unleaded 91 at $1.999 a litre, Premium 95 at $2.129 a litre and Diesel at $1.399 a litre at all Waitomo fuel stops.

These base rates will apply to Waitomo stations in Auckland, though the regional fuel tax will be additional, taking Aucklanders' unleaded to $2.099.

It's the first time since August that petrol has been available for less than $2 a litre, and comes after prices spiked to record highs in October.

* Cut price Waitomo says there is no need to intervene in the fuel market

* Pain at the pump could ease for Wellington motorists with Waitomo securing capital site**

Managing director Jimmy Ormsby said conditions were right for this price promotion.

'Kiwi motorists deserve some relief. We're running this promotion until midday Friday next week. No matter what, our customers will get a competitive Waitomo price, putting money back in Kiwi's pockets ahead of Christmas. We also wanted to celebrate the start of construction at our new Papamoa and Rotorua fuel stops.'

New Waitomo fuel stops in Papamoa and Rotorua will open in December, and a six-pump site will open early next year in Wellington, where fuel prices are among the highest in the North Island.

'We saw that the Wellington region deserved a fairer deal and greater competition, so we're stoked that we're delivering that,' Ormsby said.

'But there are many other places in New Zealand, especially in the South Island, that are still missing out. That's not fair and it's not the Kiwi way.'

By comparison, the Gaspy app rated the current cheapest petrol in Auckland on Friday as $2.19 from Gull in Kingsland and $2.26 at BP Connect on Fanshawe St.

AA spokesman Mark Stockdale said the Waitomo offer was a public relations campaign but signalled wider price movements.

'I think does reflect the continuing downward trend in prices – now fallen to $2.15 a litre for 91 petrol, so Waitomo is offering a 15c-per-litre discount, which is reasonable considering they are unmanned and have lower overheads.'

But economist Gareth Kiernan, of Infometrics, said drivers shouldn't expect to regularly see prices starting with $1 again any time soon.

'There has been a range of factors behind the substantial drop in international oil prices since the start of October, including the sanction waivers granted by the US for eight countries importing oil from Iran, continued expansion in US production, and some questions about global economic growth prospects flowing through into predictions of softer growth in demand for oil. In addition, the NZ dollar has also risen substantially since its low point in early October, so oil prices in NZ dollars are down about 27 per cent since early October – a shift that is being reflected in the pump prices.

'It would seem that Waitomo have also looked at their landed fuel costs and judged that they attract some attention with a headline-grabbing price that they can sustain over the next week.'

But he said oil futures markets were not expecting any further price falls in international oil prices.

'I wouldn't expect prices to fall further below $2 a litre without some sort of global recession. Indeed, the situation around Iran is still somewhat fluid – the sanction waivers at this stage only last for 180 days – so there is potential for some further price volatility and prices to increase. Infometrics' medium-term view on petrol prices is for them to settle in the $2.10 to $2.20 a litre range.'