We are currently experiencing substantial increases in the price of fuel, for both bulk fuel delivered on farm and card fuel purchases at the pump.
Our fuel experts at Ruralco are continually working with our suppliers to ensure we provide competitive fuel pricing for our members.
Since December 2021, oil companies have seen product costs rise significantly and these have continued to rise to levels not seen for years.
Oil companies have been seeing significant supply constraints with all fuel grades internationally, particularly diesel, and this does not look likely to ease in the immediate future. This is due to supply and demand impacts as well as geopolitical uncertainty in Russia and Ukraine.
Refined fuel is traded in US dollars; fluctuations in the exchange rate to the NZ dollar can therefore influence fuel prices and this then flows into the GST component (which is applied to the total cost of fuel, including tax and excise).
Other costs that are now having an influence on prices at the pump include the New Zealand Emissions Trading Scheme which since 1st January 2021, has increased fuel prices by 10c per litre for petrol and 12c per litre for diesel.
Another influence is the point the product is purchased by the supplier when sending product to New Zealand with the fluctuating barrel price e.g., the barrel rose to US$139, then dropped to US$123, then back up over US$130, and is continuing to move up and down with the situation in Russia and Ukraine.
With the latest political move away from Russian crude, the United States is looking at countries such as Venezuela, Iran, and Saudi Arabia to fulfill part of the shortfall.
Compatibility is a further issue, Russian crude is what is referred to as sour/heavy which was already facing falling demand, with refineries moving away from Russian crude to sweet/light crudes. These sweet/light crudes are already in high demand for their lower emissions and cleaner fuel properties and this increase in demand was already lifting oil prices before the situation in Russia and Ukraine.
You will also notice that prices are varying considerably from station to station, this can be due to either the cost of the fuel held in their tanks, or the intense competition in their trading area where prices vary often. Service stations, like many companies, have also had issues with maintaining staff levels during the COVID pandemic, and the ever-increasing cost of labour to attract staff compared to unmanned sites.
For bulk fuel supplied customers, we continue to work with our suppliers to ensure our prices are competitive. These prices are set on a weekly basis. With the current issues outlined, we also expect for the foreseeable future, that prices will continue to remain at high levels.
We recommend with such high prices that customers look to, if possible, putting security systems in place and keep tanks locked where possible, as increasing prices can lead to an increase in fuel theft.
Why do we pay so much at the pump?
The following factors make up the price you pay:
1. Taxes and duties (50%)
The base cost of a litre of fuel includes several excise taxes and levies, including:
- the National Land Transport Fund Tax (70cpl)
- an Accident Compensation Corporation Levy (6cpl)
- the Petroleum or Engine Fuel Monitoring Levy (0.6cpl)
- the Local Authorities Fuel Tax (0.66cpl), and in Auckland,
- the Auckland Regional Fuel Tax (10cpl)
All fuels are also subject to a Goods and Services Tax (15%), which is collected on the total price of fuel.
New Zealand Emissions Trading Scheme (ETS)
Every litre of fuel purchased incurs a cost of between 10c and 16c a litre which varies between petrol and diesel.
2. Product Costs (42%)
This is the cost of purchasing refined fuel, international and coastal transportation costs, and the cost of additives.
The cost of purchasing fuel is a significant expense and represents a huge portion of an oil company’s operating expenditure.
International and Coastal Transport
We live in a remote island nation with a small population that is heavily reliant on shipping. This means that shipping fuel is a significant expense, and this is reflected in retail fuel prices.
Additives
Fuel suppliers have also introduced additives which are engineered to help improve your engine’s overall performance, which can help improve fuel economy.
Exchange Rates
Refined fuel is traded in US dollars: fluctuations in the exchange rate can therefore influence fuel prices.
3. Operating Costs and Margins (8%)
This includes all the fuel supplier operating expenses as a local business, including local (road) transportation, maintenance and investment in our service station network and storage facilities, marketing costs, and any returns for oil companies and our site operators.
Our suppliers strive to offer competitive prices while generating earnings that make it possible for them to continue supplying the fuel that we all rely on.
Ruralco Card Fuel Discounts
Ruralco members benefit from a 12c per litre discount off the listed pump price at all Mobil and listed Allied fuel stops and service stations and select NPD service stations. We also have a 16c per litre discount off the listed pump price at the Ruralco Allied Hinds Fuel Stop for both petrol and diesel all year round.
Our bulk pricing is based on the weekly submitted pricing from our bulk suppliers and is reviewed regularly to ensure our offer remains competitive.
To discuss your fuel requirements and how we can help, contact our fuel experts.
The above was based on data supplied as of February 2022 and may have varied from that date.