At least once a week, well, maybe more, most of us visit a service station to feed our vehicle. It’s a regular expense and that’s why we like to keep an eye on it, discuss it, and every once in a while, rant about the government and the corporations because of the rising fuel prices.
But what exactly are you paying for and what factors decide the price of fuel? Let’s find out.
In New Zealand, fuel prices depend on various global factors like supply and demand, political climate, seasonal demands and exchange rates.
The amount you spend on a litre of petrol consists of the following:
Diesel prices differ from petrol prices for a few reasons. First of all, instead of paying excise tax (one of the taxes you have to pay for petrol), you pay Road User Charges.
The current cost of diesel consists of the following:
Some other factors that can affect the prices of diesel, but not petrol, are global demand for heating oil or demand for heavy transport fuel.
On another note, the prices of refined petrol and diesel can be influenced by various factors that have nothing to do with the price of crude oil. Even though it’s one of the decisive factors that determine the cost of imported petrol or diesel, they aren’t really related to each other.
The reason behind rising fuel prices is simple – demand exceeding supply. Refineries are trying to keep up with the demand. In times like these, when the supply is limited, any political or natural disturbance or even the possibility of such disasters, can increase fuel prices. If you watch the news, you’ll find that the countries that have oil refineries are always involved in some sort of political conflict. This may cause the prices to fluctuate from time to time.
The other reason behind rising prices is investment speculation. Due to a weaker global economic climate and a weak US dollar, money from investment funds is being directed towards food and oil. Hence, the prices are rising.
Another factor to consider here is the exchange rate. New Zealand purchases fuel in U.S. dollars. When it comes to fuel prices, we can expect some sort of cushion when the New Zealand dollar is stronger compared to the U.S. dollar. However, if the the New Zealand dollar falls, the fuel prices increase.
Usually, any such fluctuations in fuel prices affects the consumer immediately – which is good for your pocket when the prices fall, but not so good when they rise.
(Sources: Stuff.co.nz, Reserve Bank of NZ Bulletin Vol 68, No.4, aa.co.nz)
Blog article by Praneel Lal
Onsite fuelling has been one option proven to help businesses save. Try our tank calculator to see how much you can save in your business with one of our onsite fuelling solutions below.
The Fuelchief DC50 diesel fuel tank is the perfect option for when space is limited yet the power of fuel pumping is still imperative.
The Fuelchief DC100 diesel fuel tanks are the perfect option for when space is limited yet the power of fuel pumping is still imperative.
The DC150 combines security, strength and durability when it comes to fuel storage. Made from a robust double skin steel, the DC150 is a great fuelling solution.
The DC450 combines strength and security when it comes to its large fuel storage capacity. Made from a robust steel design and featuring a thick inner and outer wall design, the DC450 is the largest fuel solutions in our DC tank series.
Try our tank savings calculator to see how much you could save from buying bulk fuel, plus labour, downtime. We have easy finance options to make owning a tank easy for all.
Enjoyed this article? You may find something useful in the following:
Fuelchief define used oil exactly as what the name suggests, any oil that is petroleum (or synthetically) as any oil…
Fuel theft continues to be a major issue in all parts of the world. As thieves are finding trucks and…
When it comes to storing hazardous liquids such as petroleum, gas, and other fuels, consumers need to weigh up the…
When it comes to understanding bulk fuel storage it can be quite overwhelming. Fundamental rule of thumb is to ensure…