Fuel prices look to rise again one month after fuel excise duty cut ended
Its four weeks after the fuel tax excise duty cut came to an end and fuel prices have been relatively stable but be warned, theyre about to climb again. On July 1 the 15-month-long tax cut, which removed the 25-cent fuel excise duty from petrol prices, was reintroduced at the pump. Including GST, it meant about 29 cents was added back on to fuel prices. According to fuel comparison app Gaspy, regions had an average increase from anywhere between 20.9c and 29c straight away. Meanwhile, the average price on the West Coast rose only 19.1c. In Auckland, the average price of petrol had risen by 34.7c since prior to the tax cut ending. In Wellington, it was up 34.6c, Canterbury was up 34.4c and Waikato up 31c. Prices in Gisborne had remained stable with a 24.2c increase on July 1, but was only 26.8c more on Friday than it was before the cut ended. Northland had an increase of 21.4c on July 1 but was up only 29.8c on Friday. Gaspy director Mike Newton said prices were trending ever so slightly downward prior to July 1 and initially that trend continued through to July 17. Since then prices have steadily climbed by about 7c for 91, 95 and 98, while diesel has seen a smaller increase of 5c. One explanation for this anomaly is that the fuel companies were, for whatever reason, reluctant to pass on the full excise increase on day one and have gradually topped up to the full 29c throughout July. AA principal adviser Terry Collins said prices were heading up. Some interesting price drivers have occurred over the past month. First crude oil (Brent) was US$72.51 on 27 June, while a month later it was US$83.87 a rise of US$11.36. Usually, every dollar a barrel goes up is reflected by a one-cent rise at the pump, he said. Second was the price of carbon and a recent Government decision to backtrack on its decision to keep a tight lid on the carbon price. Under the Emissions Trading Scheme, big carbon emitters have to pay for every tonne of emissions one of the Governments major tools for doing its bit on global heating. Climate Minister James Shaw recommended following the independent Climate Change Commissions (CCC) advice and letting the price of carbon rise and stopping pumping extra credits into the market so frequently. In brief, following the announcement not to follow the CCC advice, the two carbon unit auctions tanked. Nothing sold and that left a $1b hole in the budget, Collins said. In regard to fuel, the unit price then dropped from the mid-US$80s per tonne to as low as about US$35. That meant the Emissions Trading Scheme input in fuel was 1820c at mid-US$80s per tonne. This dropped down to 1013c. Now that the Government has done a U-turn, the price will leap and so will the contribution on fuel. In short, prices are heading up.