Low Petrol Prices

Petrol is now just under $1.80 a litre, the lowest it has been in many years. In parts of the North Island, a price war between Gull and other petrol stations means that the price is even lower than this.

The reason for the low prices is an over-supply of oil – too much oil. The OPEC countries – mostly the Middle East countries – blame the non-OPEC countries such as Russia and the US. There is a suggestion that the low prices could start a global financial recession like the one in 2008.

New Zealanders are wondering if the price we pay for petrol will go lower but most probably it will not. Even though companies like BP, Caltex and Z, are paying less for oil, we pay high taxes on each litre of petrol – around 67 cents per litre. Most of that money is used by the Land Transport Authority for road maintenance and new roads, although around 7c of that tax goes to ACC. We pay 15 percent GST as well. On top of that, the petrol retailers add about 30c a litre to cover their costs, to pay their staff and maintenance of their buildings. Another factor which affects the price we pay, is the exchange rate. The Kiwi dollar is now around US65c.

If we compare the price of petrol with other countries, we can see that most European countries, especially the UK, add very high taxes to petrol. It costs people in European countries much more to drive. As a result, many Europeans drive small cars. Australia pays less tax than we do and Americans pay very little tax on their petrol.


• price war – strong competition, Gull reduces prices so other retailers reduce prices too
• OPEC – Organisation of the Petroleum Exporting Countries
• recession – economy slows down
• maintenance – repairs, improvements
• ACC – Accident Compensation Corporation
• GST – Goods and Services Tax
• retailer – someone who sells to the public, a shop owner is a retailer
• factor – something which causes a result

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