Petrol Jumps: Will It Change Habits?


Petrol is crossing the psychologically impacting barrier of $2 –and has already for those filling up with higher premium petrol.

More bad news for those addicted to their cars is to come.

The AA Petrolwatch commentary out today notes continuing rises in the commodity price of crude oil, which has climbed US$10 a barrel since mid-December, reaching as high as US$100/barrel (it averaged around US$80/barrel through most of 2010).

Allowing for the exchange rate, the net imported cost of petrol has risen 15% since December 1, with the cost of diesel up 12%. As a result, this has lead to a 15c rise in the pump price of petrol since then, and 12c for diesel.

The AA says the last time commodity prices were this high was in late September 2008, when we were also paying $2.00 per litre for 91 octane – but taxes were 13 cents lower, although the exchange rate was worth 8 cents less.

By comparison, the price of diesel, which has no fuel excise, was $1.60 a litre, due to a higher commodity price relative to petrol at that time.

At current commodity prices, the imported cost of petrol makes up about 94 cents of the price of a litre of petrol – and taxes another 88 cents.

Although the latest price rise brings the importer margin (retail price less costs) back to the top of the normal range (but above average for premium petrol), AA PetrolWatch notes that the average margin during 2010 for petrol and diesel has been consistently 2c a litre higher than it was 2 years ago, suggesting there is less market pressure to drop prices at current levels.

Its monitoring shows the band of movement between low and high margin trigger points has narrowed, with 2c price changes occurring when previously 4-5 cent price adjustments were the norm, thereby raising the average margin.

This is the AA comparison chart for 12 months up to last November.

A few weeks ago, I reported that the price of Brent crude oil (the oil sold in London) has touched its highest level in 27 months, as a result of production shutdowns and increasing global energy demand. Brent reached US$98.80, its highest level since April 2009.

The BBC reports today that the Opec oil producers’ group has signalled that it is unlikely to boost output, despite the price of crude nearing $100 a barrel.

The United Arab Emirates’ oil minister said he was not concerned about $100 oil, echoing comments from other Opec members Iran, Venezuela and Algeria.

“There is no shortage of oil, the market is well supplied,” said Mohammed bin Dhaen al-Hamli.

But the International Energy Agency said oil’s price rise was “alarming”.

We know petrol is going to continue to rise -  but there we are a long way from seriously encouraging people to move away from their use of vehicles. Or are American motorists in a land which gobbles 400 million gallons of gas a day, slowly getting the message?

In the US right now petrol has also soared in price.

Gas costs around $3.10 a gallon, (1 gallon is 3.78 litres) - the highest price since mid-October 2008. That’s NZ$4.02.

And for the first week of January, US consumer demand for gasoline was down 2.9 % over last year. According to research firm MasterCard Advisors SpendingPulse, gasoline demand for the week ended Jan. 7 was 8.39 million barrels a day, the lowest  vel not seen since Sept. 30, 2005.

However, there is no need for celebration. Winter has been severe in  many parts of the US an incentive to stay home. And commentators say this is traditionally a time just post-holiday when money needs to go towards paying off holiday credit card bills.

US gas demand and prices typically fall in January and February.

Demand has fallen but those prices aren’t. The national average for unleaded regular gasoline at $3.095 a gallon today is NZ 44 cents higher than a year ago. Higher petrol prices mean higher prices for goods being transported to stores which places more strain on household budgets.

But it is going to require something more dramatic with pricing before people switch to public transport  or alternative transport (which itself gets affected by higher prices).

A week ago I reported vehicle sales on the rise again in NZ & Australia. In NZ , the new vehicle market showed steady growth ending the year 15% ahead of 2009.

Australian sales of 4WDs and SUVs surged by 25% with a total 232,285 sold last year, and their popularity now accounts for 1 in every 4 vehicles sold.

And last May,the Motor Trade Association said that New Zealanders love of SUVs was soaring. The biggest growth in this now crowded segment has come from city type private buyers – up 73 percent for the year to date.

Or will the $2 and more price on the petrol station forecourt display boards make people think?




  1. Antz says:

    No doubt it would impact car-users, it doesn’t just look bad, but the media tends to put in an article or report whenever the petrol prices goes up after 2dollars, which is very frequent now.

  2. Chris says:

    Shouldnt impact the majority of car-users. We still have to get work and elsewhere, its just a pain having to pay more, not a deterrent.
    Cant wait for electric cars to take over though.

  3. Jon R says:

    It has impacts to our economy. Example, when petrol rises customers to service stations cut back on buying discretionary products, like a bar of chewing gum for example.

    This then means less gum is sold, less is made or imported to NZ, less people required in the transport and logistics industry. That is a very 101 basic summary of what happens - and the example came from one of my clients who sells products at service stations and was hit badly when petrol went over $2 the other year back.

  4. richard says:

    Regarding electric cars, they are surely not really the ideal. They would be fine round town but how long do they take to recharge? On a long trip you would need to take long breaks for a top up

    Then to add to that electricity is not cheap as a quick look at the power bill will show so probably a charge of electricity might cost the same as a shot of petrol?

    Bicycles are the answer!! occasional drops of oil / lubricant for the chain and the occasional tyre gives thousands of kilometres. Repeal the helmet law though!

  5. Nick R says:

    Richard, yes charging time and storage capacity are the Achillies heel of electric cars currently. However the electricity used per km is a hell of a lot cheaper than they equivalent amount of petrol. At current prices a good EV can get over a hundred kilometres off $1 of electricity. Still won’t change anything about congestion too of course!

    Repealing the helmet law would be moronic by the way, why do we need to subject our population to serious head injury so they can ride bikes? People can ride and reduce their risk of becoming a vegetable at the same time. Shall we repeal the seatbelt law at the same time?!

  6. Joshua says:

    With modern technology available today charging the car battery is just as fast if not faster than filling up with gas, and the energy used is more efficient than current fuels.

  7. Cameron says:

    The crunch time for petrol prices will be July, which is the US driving season. Watch demand growth in China as well.

  8. Eric says:

    I personally think hydrogen cars are the way to go:

  9. Andrew says:

    The fuel cell is a long, long way away from mass production, unlike the battery-electric, of which the first mass produced model - the Nissan Leaf - started production last December.

    I expect fuel cells to eventually find their way into larger vehicles - trucks, buses, maybe even rail locomotives.

    Robert Llewellyn is a UK actor and celebrity who has started making an online electric car show called Fully Charged. His formatting is a bit of a piss-take on Top Gear but the content is quite interesting. Here’s his episode on the Honda Clarity Hydrogen-Electric:

  10. patrick says:

    YES it affects me travelling 160 k’s return each day.
    May have to move closer or car pool?

  11. Scott says:

    There remain many major technical problems to be overcome before hydrogen cars will be viable.

    @Patrick, Ouch, that’s a long way, ~$150 a week on petrol?

    Comparing nominal prices over long time periods is largely irrelevant. $2 per liter is not hugely expensive when compared with historic (real) prices. As such I do not expect to much of a change in car use when petrol crosses that price?

  12. GJA says:

    At least when I ask for $20 worth of petrol, I still get $20 worth of petrol. ;-)

  13. patrick says:

    @ Scott, yes it’s $30.00 return when petrol reaches $2.00 for me

  14. Mr Oil says:

    Dear Patrick,

    On behalf of the oil producing nations I would like to thank you for your regular financial donations to our back accounts.

  15. ingolfson says:

    “People can ride and reduce their risk of becoming a vegetable at the same time. Shall we repeal the seatbelt law at the same time?!”

    You know, there’s actually a number of reasons why approx 100 years after bicycle helmets were invented, helmet laws exist in only a minuscule number of countries (I think about 3-4) worldwide, whereas 50 or so years after seat belts were invented they are pretty much mandatory worldwide.

    The short reason is: helmet laws have unintended transport and societal health drawbacks which outweigh their advantages. Seatbelts have almost no unintended consequences. You are comparing apples with grapes.

  16. Nick R says:

    The reason seat belt laws are mandatory across the western world is due to the fact that a hell of a lot more people drive and for longer distances, making the exposure rate massively higher.
    Through the 60s and 70s when they same the horrific injury and death rates occuring as a result of motor vehicle injury they then moved toward making seatbelts compulsory. There are about a thousand times the number of serious injuries and deaths from cars that there are from cycling. This is why countries make seatbelts compulsory.

    Currently the low number of people cycling (approx 1-2% of trips at best) means that it is not a major public health risk, but it is indeed a serious personal health issue as the injury rate is so high. Australia and New Zealand are somewhat unique in that they have both a very strong public health and injury prevention system (missing in most of the developing world and the united states), plus they have very high rates of cyclist injury (the rates are much lower in Europe). The natural consequence of these conditions is to do something to prevent these injuries among those that cycle.

    It is all well and good talking about fitness and healthy transport, but just how fit and healthy can a person be with a permanent brain injury? They’d be lucky to be able to walk straight let alone ride.

    I know some people like to claim that if we had no helmet laws they population at large would flock to cycling and everyone would be fit and there would be less traffic, but that is simply a fiction. Without helmet laws we would simply have much the same amounts of cyclist except they rates of debilitating head injuries would skyrocket, particularly among children.

    Yes there are some European countries that have very high cycling levels and no helmet laws, but Auckland is not Copenhagen and removing the protective covering from cyclists brains will not make Auckland into Copenhagen.

    Europe has very different road user culture, different roads and infrastrucutre. They can get away with no helments as still have relatively low injury rates because they have such a strongly institutionalised cycling culture and cities that are built to accomodate it.

    The simple fact is that helmets don’t prevent people from cycling, people can cycle perfectly fine with one on and indeed they do. Cycling levels in Australia and New Zealand have been growing massively (albeit from a low base) even with helmet laws in place. Why are all these people taking up cycling (and wearing helmets while doing it), if helmets are such a barrier to people taking up cycling?!

    People really need to stop moaning about helmet laws and get on to promoting the health and transport benefits of cycling that are still exactly the same if you have a helmet on or not.

  17. ingolfson says:

    Nick R, it seems you are confusing my querying some of your arguments and opinions with me claiming the removal of the cycle helmet laws will be a silver bullet.

    And the exposure / “people just don’t care enough” argument fails in the face of countries much, much larger than New Zealand, which have much much higher cycling mode share, and do perfectly fine with VOLUNTARY helmet wearing. You will not find brain injury rates in Denmark or the Netherlands being elevated to significant degrees. Unless you argue they’ve been covering up decades of data saying otherwise.

    You have some correct arguments when you argue that their (European) cycling / roading culture is better, and SOMETIMES their infrastructure is better too. However, such things do not come out of perfection, they grow gradually, and an eventual repeal of the helmet law in NZ will be part of the change to the better overall. I am not spending any time (well, beyond arguing on the net) on it, because I do not believe we are anywhere near the point where such a campaign would be successful, but I believe it’s needd at some point.

    The pro-cycling / anti-helmet faction meanwhile has brought forward the perfectly valid argument (though used in a “see how ridiculous this whole thing is”) that if cyclists should MANDATORILY wear helmets, so should pedestrians and motorists - or at the very least, so should people like amateur rugby players (who have ACC payouts an order - x10 - the level of cyclists). They can also show you statistics that show that the health downsides of repealing the helmet law for society would be outweighed by the upsides for society. But since it is such a loaded subject, people seem willing to assume that the other group’s arguments are spurious, or crazy.

  18. Nick R says:

    Sorry ingolfson, I guess I was conflating your comments there with the general thrust of the anti-helmet argument (the idea that helmet laws are significantly holding back cycling levels and creating social health and congestion issues as a result). The ‘statistics’ about health downsides and the like are really quite poor research. They basically compare cities with high and low cycling rates according to their levels of cycling injury and various indicators of fitness and fatness. But is it a between subjects comparison, a correlation that doesn’t prove causality. It doesn’t actually show that we can get to where they are by repealling helmet laws. At most is says they don’t need helmet laws because they have much safer cycling conditions.
    Like I said, repealing the law will not turn Auckland into Copenhagen, it will just be Auckland with no helmets. I would love to see some research that predicts how many more Aucklanders would ride bikes if the laws were repealed, and exactly how their increased fitness etc would pan out in population health terms in relation to the increased number of permanent disabilites that would result.

    Really the only difference between anti cycle helmet arguments and anti-seatbelt or anti motorcycle helmet arguments is that the cycling advocates often try to stand on a high horse about being fit and green.

    It seems we are in agreement regarding the concept of an eventual repeal. If we could get New Zealand to the same sorts of cycling conditions where the serious head injury rates would be as low as the european paragon cities without helmets, then I would agree the law was perhaps superfluous. But my point is NZ is light years away from that, and any talk of repeal now is irresponsible.

    The point about pedestrians and motorists wearing helmets too is a bit of a red herring. The pedestrian head injury rate is almost negligible. Compared to cycling, a lot more people walk a lot more kilometres overall and get a lot fewer head injuries doing so. There exists no problem to which pedestrians wearing helmets would be the solution.

    As for motorists, people in my industry have spent decades on campaign after campaign to implement safety systems in cars to reduce motorist injury, most of which are now compulsory. There is compulsory seat belt wearing, mandatory speed limits, mandatory blood-alcohol limits, graduated driver schemes,all new cars must have airbags, side intrusion beams etc etc. Motorists have a huge range of compulsory laws and systems designed to protect them from harm. I think the key thing here is that cars have a steel shell protecting the occupant on which effective design measures can be implemented, so the prevention measures tend to take the form of behavioural intervention and passive safety design. Cyclists have no opportunity for such passive safety systems, the last line of defense is their skull unless they have a helmet on.

    I guess the best comparison is motorcylists, they have much the same risks and lack of passive protection as cyclists, just multiplied by the greater speeds involved.

    As for footy players, we’ll we have been pushing very hard to make head gear a compulsory part of the uniform for precisely the reasons you mentioned, and I know ACC is behind the idea because they know how much it costs them. The problem in this case is that rugby in NZ (and AFL/league in Australia) is something of a cultural institution that can’t be touched, and making people wear headgear would make them all a bunch of “weak poofter sookies” and ruin the game for all the real tough heroes out there.

  19. greg says:

    The simple fact is that helmets don’t prevent people from cycling, people can cycle perfectly fine with one on and indeed they do.

    Yes they do prevent people from cycling. I for one simply refuse to cycle if I have to wear a polystyrene hat on my head.

    The helmet laws are stupid and damaging and need to be repealed.

  20. Matt says:

    Greg, that’s a choice you make. The law doesn’t prevent you cycling, it just discourages you because of choices you make. Don’t blame the law for your choices.

    On rugby, their costly injuries are mostly spinal, not head. Helmets wouldn’t help. Revising scrum law helped enormously without requiring the introduction of a single bit of extra clothing.

  21. Nick R says:

    Greg, it is not the helmet that prevents you from cycling, it is your attitute that prevents you from cycling.

    This suggests that overcoming people’s ignorant and foolhardy attitudes might be a better way to encourage cycling, rather than leaving them ignorant, foolhardy and unprotected.

  22. greg says:

    Now now there’s no need for ad homenium. Just a little reminder you as you go about your business of promoting & defending these mistaken helmet laws that there are many people — including myself and almost all of my friends — who are totally against what the govt has done to Oz and NZ. One day hopefulyl soon we will get the law changed back. I imagine it will happen first in Australia and New Zealand will copy it.

    Especially it is very sad for both countries that the result of the law has been the demonisation of utlity cyclists, who often only want to cycle down the shops on quiet streets or through the park where there is very little danger of the massive brain injury that the health nazis their magic plastic hats are trying to protect them from.

    Build better cycling infrastructure, repeal the helmet laws!

  23. Matt says:

    health nazis their magic plastic hats

    What were you saying about ad hominem attacks?

    Regardless, you choose not to ride if you have to wear a helmet. The law does not force you not to ride, or prevent you from riding. The law does not say “You must not ride”, it says “If you don’t wear a helmet while riding, there’s a nominal financial penalty if the police catch you.” Don’t blame the law for your choices, because no matter how you try and justify them they’re your choices.

  24. greg says:

    Okay so if it’s my choice i can choose to ride without a helmet? No.

    The govt is making the choices here Matt. And they must live with the consequences, which is a decrease in the popularity of cycling.

  25. Matt says:

    No, Greg, you choose to not ride if you will be penalised for not wearing a helmet. That’s your choice. You could wear a helmet, obey the law, and ride your bike.

    The Government is making a choice to reduce the risk of head injuries in cyclists, which is a reasonable choice to make, much as it’s reasonable to discourage driving while impaired or driving while you or your passengers aren’t wearing seatbelts. You make a choice not to ride unless you can do it legally without a helmet. They’re valid choices, but don’t blame the law for “making” you not ride a bike. The only person making that choice is you.

    And yes, you can choose to ride without a helmet. The law doesn’t force you to wear one, it just provides consequences if you don’t. Not the same thing. The law cannot stop anything, it can only discourage and penalise if the discouragement fails. That you obey the law is your choice.

    You don’t seem to have a good grasp on the concept of choice. If someone held a gun to your head and said “Ride that bike, with a helmet, or I’ll shoot you”, that would be forcing you to ride with a helmet. Or you could choose not to, and be shot, but you made a choice. You don’t have a choice about obeying the laws of nature. You don’t have a choice about breathing (try holding your breath and see what happens). You do have a choice about riding a bike without a helmet, and you have chosen not to do it rather than to accept the potential consequences. It’s not a criminal offence, just a summary one. You get a fine, not sent to prison. That’s a pretty bloody weak level of compulsion for something that has you so riled up that you describe in terms bordering on wrecking society. The law doesn’t even force people not to murder, despite the almost-certain life sentence, as witnessed by the fact that we still have murders, so don’t try and tell me that the law is forcing you not to ride your bike.

  26. greg says:

    Um where did I ever say the law is forcing me not to ride my bike? Oh that’s right I didn’t.

    Regardless, quibbling over the definition of “choice” is not the problem. The problem we’ve got in Oz & NZ is an unreasonable law that has had unintended consequences which have been very bad for cycling and by extension for society. From what you’ve written above it seems you think it’s a very reasonable law indeed.

    Please explain to me why it is reasonable that a person on a bicycle travelling at 6km/h across a grass field is required by law to wear a helmet.

  27. Matt says:

    Greg, the law says you must wear a helmet or face being fined. You have said that you “refuse to ride” if you have to wear a helmet, and you have said in no uncertain terms that you disagree with the law that says you must. That is not hard to take as you saying that the law forces you not to ride.

    And the law doesn’t require “a person on a bicycle travelling at 6km/h across a grass field” to wear a helmet. You don’t even know what the law requires, but you hate it anyway.

  28. KLK says:

    Nick R: “The problem in this case is that rugby in NZ (and AFL/league in Australia) is something of a cultural institution that can’t be touched, and making people wear headgear would make them all a bunch of “weak poofter sookies” and ruin the game for all the real tough heroes out there.”

    As I understood it, recent neurological research (as late as 2010) indicated that headgear and mouthguards were “ineffective” in preventing head/brain injuries. As someone who tried it (and didn’t like it) it seemed to only prevent external injuries (cuts), but nothing to prevent the brain rattling round in the skull when taking a hit there.

    And I’m not sure if you have played the game, but when I last did at University (mid-90s) headgear was accepted universally. I never heard anyone calling a team member/opposition player “soft” for wearing it. In fact, it was never even mentioned - and that was 15yrs ago. I’d be surprised if we have regressed from there given our national Captain wears one on occasions.

  29. greg says:

    Matt thank you for pointing out that the law doesn’t apply to cycling off road. Is that what you are saying? If so I am very happy and I look forward to cycling legally along John Key’s cycleways without a helmet.

  30. Matt says:

    Greg, feel free to look up the law. It’s here. You can decide if a road means what you think it means.

  31. Andrew says:

    Matt: you also have to realise that for some people it seems natural to wear a helmet, but for others it puts them off completely for many various reasons. If people will keep out of their cars sometimes by cycling short distances without a helmet, then so be it. Let them be.


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