Santa pumps some joy into the nation’s fuel tanks for holiday season

Petrol prices are coming down heading into the Christmas holidays following a sharp drop in global oil prices.

The average price of unleaded 91 petrol was $2.42 a litre yesterday afternoon, having dropped 21.72 cents over the past 28 days, according to fuel comparison site Gaspy. The year’s high was $3.119 on June 27. Global oil prices have tumbled recently as fears about a slowdown in production due to a price cap on Russian exports receded and traders became more concerned a looming economic recession would weaken demand. Brent crude oil has dropped US$10 a barrel over the past five days to about US$78 a barrel, touching a low of US$76.24 a barrel yesterday. A month ago it was close to US$100 a barrel.

AA principal policy adviser Terry Collins said the lower prices should flow into the market over the coming months. Every US$1 drop in barrel prices was equivalent to about 1c at the pump, he said.

‘‘What we may start to see for the next month or so, hopefully, is those cost savings flowing through to what we pay at the pump,’’ he said.

‘‘In the next month or so over our holiday period with any luck we should see that come through.’’

That will be welcomed by those hitting the road over the Christmas holidays but could encourage the Government to reintroduce its 25 cent-per-litre fuel tax. The Government temporarily removed the tax in March in response to a spike in fuel costs following Russia’s invasion of Ukraine, although the subsidy is due to expire at the end of January. Cabinet is expected to make a decision on the subsidy at its last meeting of the year on Monday.

Collins expects it to confirm the tax will be reinstated from February.

‘‘This may turn out to be the most opportune time to do it because the prices are low so it won’t seem so bad,’’ he said. ‘‘Motorists would have benefited from relatively low-cost fuel over the holiday period and then if they put it back on again, it has been well signalled and as prices are low, it may not have such a hard impact.’’

Collins noted a strengthening New Zealand dollar following the Reserve Bank’s latest interest-rate hike was also helping lower local fuel prices.

Still, he said, there were uncertainties ahead, including the impact of future sanctions against Russian oil, a loosening of Covid-19 restrictions in China which could increase demand, and whether the Organisation of Petroleum Exporting Countries (Opec) will cap production to bolster prices.