Why is the price of petrol at the pump going up even while the crude oil price falls?
The price of Dubai crude oil in New Zealand dollars has fallen from $210 a barrel mid-September to $192.
At the same time, the weekly adjusted retail fuel price of petrol has increased from about $3.15 to more than $3.50 a litre, according to Ministry of Business, Innovation and Employment data.
Infometrics chief forecaster Gareth Kiernan said MBIE's estimates also suggested that over the past few weeks, importer costs had been rising, reflecting a divergence between oil prices and refined output prices.
"We saw a similar, more pronounced, example in March and April this year, when diesel prices surged far more than crude prices would have implied.
"It might also be that Dubai oil prices are currently not the best indicator of what is flowing through into our retail operations, given the disruption to supply from the Middle East, which has meant that Asian refineries have been forced to source oil from elsewhere."
He said there seemed to have been a lag between international oil prices rising and petrol pump prices rising.
Westpac chief economist Kelly Eckhold agreed there were a few reasons that the prices might have diverged.
"We don't use Dubai crude to give us the best indication. We use Singapore Mogas, which I realise sounds like gobbledygook but basically Mogas is essentially the wholesale version of petrol. So when they distill oil into different things, one of the things they get is called Mogas, which is petrol, and Gasoil, which is diesel."
He said there could be situations where the diesel price went up but Mogas did not, and both could work differently to the price of crude oil.
He said there was also usually a lag effect between oil prices and Mogas moving and the retail price that drivers paid changing.
"It takes two or three weeks before whatever's happening in the wholesale marekts and the exchange rate will flow through to what you see at the pump.
"I do half expect that there might be a fall in petrol prices coming, or at least some kind of stabilisation because I have noticed that some of these refined fuel prices have fallen back a bit in the last week or so. The exchange rate is still quite low but it isn't really moving … so that's not putting any additional pressure on."
He said the wholesale price of Mogas had stabilised over the last couple of weeks and the exchange rate was about the same, so there was no additional pressure going on fuel prices.
But he said there was also not a lot of evidence that they should fall much, either.
"I suspect that if the Dubai price is falling it may be something a bit more specific to Dubai itself."
He said Middle East companies had also been offering discounts for crude oil because they wanted people to pick it up and transport it out of the region. "That's quite expensive right now because the Iranians are shooting at people. You could understand how there might be some kind of additional transportation costs associated with that."
