Petrol prices may fall to around $1.70 a litre in some parts of New Zealand where Australian player Gull is savagely discounting, an energy specialist tips.
But how long low petrol prices will last is hard to predict, experts say.
Australian petrol retailer Gull is offering petrol as low as $1.65 a litre in some parts of the North Island.
Energy firm analyst Richard Hale of Hale and Twomey says a "Gull effect" on fuel prices will force prices down as customers flock to Gull's special deals.
Gull operates in the North Island but not in the South Island or in Wellington city. It has been discounting as low as $1.65 a litre.
"Other oil marketers are either pricing at a similar level, or at parity with Gull, simply to retain their market share in those regions," Hale said.
Petrol prices have fallen 28c in 13 fairly small reductions since mid October. Abundant international oil supplies have led to a 40 per cent fall in international oil commodity prices.
Hale would not hazard a guess on how long lower prices would last but said big oil producers were trying to squeeze each other out of the most profitable markets.
The average national price for 91 octane was $1.94 per litre but some service stations were charging up to 30c less, especially where Gull was operating.
Hale said Gull may be using its lower cost structure to discount more deeply, knowing that its competitors' retail margins were "quite high".
In New Zealand, the Automobile Association said it was "uncomfortable" with fuel companies stretching their profit margins in this environment.
Current importer margins suggested fuel prices could fall again, especially diesel, to bring them into line with average margins this year, AA senior policy analyst Mark Stockdale said.
Even if special discounts were ignored, prices were the lowest in four years. Stockdale said predictions on future international commodity and local retail prices would be hard, given no-one expected prices to go this low.
The discounts were perfect for summer holidays but fuel company margins were still high, he said.
The commodity price makes up about a third of New Zealand's pump prices.
Stockdale had no doubt energy companies were passing on the sharp drop in the price of the commodity component but it was a different story on government tax and fuel company margins.
"The margins haven't changed. That 28c is the reduction in the commodity price."
Neither of these other factors had changed much, except for the GST tax-take falling by the equivalent of a couple of cents on the lower pump price.
"I do think it's a fair point [of criticism], that the margins are still the same as they have been for most of this year. And those margins are high, based on recent trends."
Margins had been "creeping up" since 2009 and were now at their highest for many years.
Source: The Press
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