New Zealand is experiencing the fourth-largest increase in fuel costs in the world on a per capita basis, new data from the Centre for Research on Energy and Clean Air shows. The global oil price shock this year has added US$468 billion (NZ$833b) to the world's fuel bill, with the United States, Canada and Australia ahead of New Zealand in total impact.
New Zealand had the 10th highest increase in diesel prices globally compared to pre-conflict levels, up US55c (NZ99c) a litre, according to the data.
Westpac chief economist Kelly Eckhold said the impact was due to New Zealand's high car ownership levels. 'A lot of people don't live in very large, developed metropolitan areas where you have a lot of public transport available,' he said.
Eckhold noted that fuel spending was up 27 percent per person compared to the same time a year ago, but the implied volume of fuel purchases was lower by about 12 percent. 'We're spending more, we're driving less,' he said, pointing to an 18 percent increase in public transport spending on cards since February as a reflection of changed behaviour.
Simplicity chief economist Shamubeel Eaqub said New Zealand was 'very exposed' to fuel price movements, not only because of car usage but also due to the high cost of transporting imported goods. 'We are quite dependent on imported products so everything is transported here,' he said.
Gaspy data shows the average price of 91 petrol on Thursday was $3.51, up 3 percent over 28 days. Diesel was at $3.17, up 1.46 percent. Thursday is often a discount day for retailers. The cheapest 91 petrol in the country was at Tasman Epsom, at $3.19.
Eckhold said New Zealand households were being disproportionately affected. Many were having to spend money on fuel that might otherwise have gone on other things, including 'nice-to-haves'. 'I think it's self-evident that, you know, if we hadn't seen this Iran war and the big increase in oil and fuel prices, then the economy would probably be stronger for it,' he said.
Analysis
Why This Matters
- New Zealand households are facing higher fuel costs, reducing disposable income for other spending.
- The rise in fuel prices is driving a shift in behaviour, with people driving less and using public transport more.
- The fuel price shock is adding to economic pressures, potentially weakening the broader economy.
Background
The global oil price shock stems from the Iran war, as noted by Westpac's chief economist. New Zealand's geographic isolation and reliance on imported goods, combined with high car ownership outside dense urban areas, make it particularly vulnerable to fuel price increases.
Key Perspectives
Kelly Eckhold (Westpac chief economist): says the impact is due to high car ownership outside large metropolitan areas with limited public transport. He notes that fuel spending is up 27% per person but volume down 12%, and public transport spending up 18% since February.
Shamubeel Eaqub (Simplicity chief economist): says New Zealand is 'very exposed' because of car dependence and the cost of importing goods, which adds to transportation costs.
What to Watch
- Whether fuel prices continue to rise or stabilise as the global situation evolves.
- Changes in public transport usage and household spending patterns.
- Potential government measures to mitigate fuel cost pressures.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedNew Zealand has the world’s fourth-largest per-capita increase in fuel costs.RNZ New Zealand Headlines: “New Zealanders are facing the fourth-highest increase in fuel costs in the world, on a per capita basis, new data shows.”
- SupportedEconomists point to high car ownership and reliance on imported goods as factors in New Zealand’s fuel-cost exposure.RNZ New Zealand Headlines: “Kelly Eckhold said the impact was because New Zealand had high levels of car ownership. […] Simplicity chief economist Shamubeel Eaqub said New Zealand was "very exposed" to the fuel price movements, not just because of the use of cars but because the cost of getting items to New Zealand was high.”
- SupportedThe global oil-price shock this year added US$468 billion (NZ$833 billion) to the world’s fuel bill.RNZ New Zealand Headlines: “the global oil price shock this year has added US$468 billion (NZ$833b) to the world's fuel bill.”
- SupportedThe United States, Canada and Australia had greater total fuel-cost impacts than New Zealand.RNZ New Zealand Headlines: “The United States has felt the largest impact, with an additional US$160b (NZ$285b) added to its fuel costs. Canada was just behind, followed by Australia and then New Zealand.”
- SupportedNew Zealand had the 10th-highest increase in diesel prices globally compared with pre-conflict levels, up US55c (NZ99c) a litre.RNZ New Zealand Headlines: “New Zealand had the 10th highest increase in diesel prices in the world compared to pre-conflict, up US55c (NZ99c) a litre.”
- SupportedEckhold said: “A lot of people don't live in very large, developed metropolitan areas where you have a lot of public transport available.”RNZ New Zealand Headlines: “"A lot of people don't live in very large, developed metropolitan areas where you have a lot of public transport available."”
- SupportedEckhold said fuel spending was up 27 percent per person year on year, while the implied volume of fuel purchases was down about 12 percent.RNZ New Zealand Headlines: “He said fuel spending was up 27 percent per person compared to the same time a year ago but the implied volume of fuel purchases was lower by about 12 percent.”
- SupportedEckhold said, “We're spending more, we're driving less,” and pointed to an 18 percent rise in public-transport card spending since February as reflecting changed behaviour.RNZ New Zealand Headlines: “"We're spending more, we're driving less, and you can see one of the effects of that in that public transport spending on our cards is also up 18 percent since February … so that does reflect a change in behaviour because the cost of driving has gone up."”
- SupportedEaqub described New Zealand as “very exposed” to fuel-price movements because of car use and the cost of transporting imported goods.RNZ New Zealand Headlines: “Simplicity chief economist Shamubeel Eaqub said New Zealand was "very exposed" to the fuel price movements, not just because of the use of cars but because the cost of getting items to New Zealand was high.”
- SupportedEaqub said, “We are quite dependent on imported products so everything is transported here.”RNZ New Zealand Headlines: “"We are quite dependent on imported products so everything is transported here."”
- SupportedGaspy data put Thursday’s average 91 petrol price at $3.51, up 3 percent over 28 days, and diesel at $3.17, up 1.46 percent.RNZ New Zealand Headlines: “Gaspy data shows that the average price of 91 on Thursday was $3.51, up 3 percent over 28 days. Diesel was at $3.17, up 1.46 percent.”
- SupportedEckhold said that without the Iran war and the increase in oil and fuel prices, the economy would probably be stronger.RNZ New Zealand Headlines: “"I think it's self-evident that, you know, if we hadn't seen this Iran war and the big increase in oil and fuel prices, then the economy would probably be stronger for it."”