Petrol Prices Drop Overnight After Tax Cut

Energy

* This story first appeared on RNZ and is republished with permission *

A 25 cent cut in fuel excise and funding to halve public transport prices aim to counter the rising cost of living

Petrol prices should have fallen about eight percent or 25 cents a litre overnight, back to what they were three or four three weeks ago.

To counter the rising cost of living, the government has temporarily pulled 25 cents a litre off its fuel excise duty and told the petrol companies to pass it on. That should be a saving of about $11 to fill a 40-litre tank and $17 for a 60-litre tank.

Fuel prices were already rising before Russia invaded Ukraine, which occurred on February 24 and quickly sent prices to over $3 a litre for regular 91. They are now the highest they have ever been in New Zealand, causing people to change how they live.

Fuel taxes have been slashed by 25 cents a litre for the next three months – and public transport fares halved – as the Government acts to counter the soaring petrol prices. Mobil made changes to its fuel price immediately.

Speaking after Monday’s Cabinet meeting, Prime Minister Jacinda Ardern said the invasion of Ukraine had unleashed a “global energy crisis”, with all three fuel types rising for the highest amount on record.

Prices have increased 13 percent in the past month.

“We are in a wicked perfect storm and it’s a storm that’s impacting many people’s lives,” Ardern said

The impact of the invasion was expected to mean “continued volatility” for fuel prices.

All public transport fares will be halved for the next three months. “We hope this ensures that where the option of shifting how we travel is available, this makes it more affordable to take that public transport option up.”

Labour has reduced cost pressures on New Zealand families since day one of taking office – what is happening now warrants a specific response, Ardern says.

She says the government has been working on additional policy over the past week, but says current transport projects and legislative changes – expanding public transport, and making public transport cheaper, and supporting fuel-efficient, hybrid or electric vehicles – must continue.

Members of the public unsurprisingly welcomed the price reductions, but expressed concern the war could lift fuel costs again.

“Filling up last week was $200,” one man, Dean, said.

“It limits us from visiting families and friends,” Tema said. “[The reduction] will really help us in this crisis situation that the whole country’s going through.”

The excise tax reduction will mean a lot for Aucklander Regiane and her family.

“I can buy some more things for the girls, more fruit, and some meals that are more healthy than just eating frozen vegetables,” she said.

Another Aucklander, Alan, thinks the move is good but the 25 cents a litre might just get swallowed up by global oil price rises anyway.

“I think petrol prices will continue to rise with what’s happening in Russia. But also the cost of living everywhere has just gone up so much. And I’m not sure the government has quite understood that yet.”

In Christchurch, Luke Cairns thinks this spending could be more targeted to those who would benefit more.

“I don’t think it’s really the best choice. If it was really to [increase] lower incomes, it’d be better to put it into Working for Families or something.”

For those concerned about whether prices would really drop, Gull petrol stations general manager Dave Bodger said New Zealanders could count on them for it to happen.

“Most definitely. We’ve just got to work out with the government as to how that goes back up in three months’ time so there’s no undue panic at the bowser.”

Yesterday, Mobil announced it would bring into effect changes immediately, cutting its prices across all grades of petrol.

The fuel excise cut will last for three months, that is until mid-June, during which the government will review the scheme.

The duty still paid on fuel is about 55 cents a litre. Then there is 35 cents in GST, and about 15 for the Emissions Trading Scheme.

If paying an arm and a leg for petrol hasn’t been an incentive to try the bus or train, price fares might be.

Public transport fares across the country will be cut by 50 percent for three months, starting April 1.

Aucklander Archie thinks people should give public transport a go, but not necessarily for financial or environmental reasons.

“Anything can happen on a bus. If you’re a single man or woman you might find the love of your life on a bus. You might just enjoy not having to think and drive for once. Get your head down, read a book. Talk to people – what happened to talking to people on the bus?”

The last couple of years have been a whirlwind of financial hits, according to a Tauranga budget adviser. A housing crisis, then Covid-19, then inflation, and now a war hitting the pump.

Bay Financial Mentors general manager Shirley McCombe said petrol was one part of cost of living troubles, but it was housing that loomed over everything else.

“When we see people who are paying such ridiculously high amounts for rent… the money that’s left over doesn’t even stretch far enough for food. Never mind petrol.”

The number of food parcels distributed by Auckland City Mission has quadrupled since 2016.