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Petrol is going up, and up

Written By: - Date published: 8:30 am, June 30th, 2018 - 57 comments
Categories: auckland supercity, China, climate change, Deep stuff, Environment, Europe, global warming, International, iraq, Japan, phil goff, Politics, public transport, Russia, science, sustainability, transport, us politics - Tags:

Not all the current government’s fault, but the arrival of the fuel tax this weekend heralds a number of very sharp rises in what we have to pay in order to run a car.

Oil prices rose on Wednesday as a supply disruption in Canada hit. U.S. officials have told oil importers to stop buying Iranian crude from November. And there are continuing supply risks from Libya and Venezuela that will start to bring barrel prices upward.

For those particularly reliant on Iranian oil supplies such as Japan and South Korea, that is bad news. They will probably get waivers from the U.S., but it’s still a big security item. Between them, China, India, and Turkey account for about half of Iran’s oil exports, and it’s hard to see those countries simply folding to do the U.S.’s bidding against Iran.

And of course the U.S. economy is going gangbusters, which means more and more oil is needed.

All of that affects New Zealand, which imports it all. Transport Minister Phil Twyford has flagged increases of between 3 cents and 4 cents a litre for each of the next three years to fund transport plans. That’s roughly comparable to the fuel tax increases under the previous government.

The New Zealand dollar is falling rapidly, for a bunch of technical reasons. That means it’s getting much more expensive to buy the oil to get refined into petrol and diesel. That too will add to the price at the pump.

At least in Auckland, we now have a fully refreshed bus system to take more of the load as people see it as too expensive to own and operate multiple cars at home.

In time that bus fleet will turn electric. And the passenger rail systems in Auckland and Wellington – which is most of New Zealand’s public transport passengers – are fully electrified. Only a very few company fleets are near-fully electric, but Air New Zealand is one of them.

Yet for the foreseeable future Auckland and New Zealand will remain one of the most petrol and car reliant countries on earth.

Make no mistake this set of rising taxes on a core household and business cost is going to hurt the poor most, so from this weekend onward that we see the political price of the Auckland fuel tax start to bite. It’s also going to be inflationary because it affects freight costs.

To my mind this is a government test between the urban liberal activists pushing higher taxes and more public transport use through price and urban public transport, and social activists who support greater wages and purchasing power for the poor. Electric vehicles will not reduce transport poverty – when transport costs take more and more of the household compared to groceries, electricity, phone and health.

How government and Auckland Council respond to the inevitable media interviews and shots of queues outside petrol stations is going to be quite the political test for this year.

It’s sure hurt before.

57 comments on “Petrol is going up, and up”

  1. Bill 1

    Take the money that the last government was earmarking for carbon credits (was it $10 billion or $14 billion over ten years?), and use it to buy up all of NZs petrol, diesel and oil with the intention of giving it away for free at the point of sale (about $2 billion in the first year), but subject to a hard sinking cap that brings NZ to zero carbon from fossil in line with the world’s remaining carbon budget for 2 degrees.

    That doesn’t hit the poor and isn’t necessarily inflationary. Companies, farmers, bus fleets etc that receive free fuel (for heating and transportation) will then have a known period of time in which to invest the savings accruing to them in non-carbon energy sources.

    Anyone wealthy enough can buy themselves an electric car during that period if they want, and may even be lucky enough or quick enough to avoid the inevitable “carbon footprint” tax on manufactured/imported goods.

    Oh hang on! I’m stupidly describing a world where governments are serious and intelligent around fossil fuel use and AGW.

    Back in the real world…

    If you’re wealthy enough, hope you stay wealthy enough to successfully absorb those ever increasing fuel costs. And buy a heat pump for those heat waves – but just hope the grid is overhauled and expanded to withstand the extra loads that are coming. And if you’re poor? Well hey, we weren’t all going to make it…

  2. opium 2

    I think increasing the tax on fuel is a mistake.There are already massive taxes on fuel & yet governments keep putting on more.It is starting to hurt filling up at the pumps.I think this is going to bite labour as it hits people in the pocket.

    • dukeofurl 2.1

      The 22c of new fuel taxes during Nationals time didnt seem to hurt them ( including a 4c hit when GST rose to 15%)
      https://www.aa.co.nz/cars/owning-a-car/fuel-prices-and-types/fuel-prices/

      ‘carbon charges on fuels through an emissions trading scheme on 1 July 2010, currently costing about 2.5 cents per litre…. annual increases to the national petrol tax on 1 October 2009 and 2010 (3 cents per litre each), 2c in August 2012, and 3c each in July 2013, 2014 and 2015.’

    • millsy 2.2

      What about National’s ACC reductions, which are weighted towards newer cars. Also the WOF changes. To get your car tested at VTNZ (I don’t trust the garages) previously costed about $50. Now it costs $61. Owners of newer cars pay $61 for a yearly WoF, and owners of older cars pay 122 a year for a 6 month WOF.

  3. DH 3

    Yep. The lower incomes have been driven further & further out into the suburbs by rising housing costs and here they get kicked while they’re down once again.

  4. AB 4

    I will be cutting back on ‘discretionary’ travel, i.e. anything not related to earning income, buying food or moving elderly and/or disabled relatives to school, doctors etc.
    So the price signal works in my case, my carbon emissions are reduced, I clutter up the roads less and my quality of life goes down a notch. Awesome.
    Of course my sensitivity to price signals is higher than most (and lower than plenty too). But I suspect the architects of this policy are in the former group and will still be enjoying $11 craft beers and barely noticing the petrol price increase, or climbing smugly on the train because that is a realistic option for them.

    • indiana 4.1

      I guess if you have kids, they will have to miss out on weekend sport too – you’ll just be wasting petrol for those sorts of things too.

      • saveNZ 4.1.1

        My kids don’t do weekend sports, spending a weekend in the car is not my idea of fun! Not to mention all the costs, uniforms, fees etc. Bring back sports at school as part of the curriculum within the school hours, for everyone and have it at a decent level!

        It is completely unsurprising to me, that our obesity is rising because to be healthy aka a range of different sports offered to kids, seems to be an extra.

        • solkta 4.1.1.1

          Schools still waste lots of time on PE and trying to force students to play sport when they don’t want to. All that achieves is to teach them to dislike exercise.

          You don’t sound like a very dedicated parent.

  5. dv 5

    Poor auks
    Price now just over wgtn price
    Boo Hoo

    • saveNZ 5.1

      yes, but wait til they roll it out to a city near you, dv.

      That’s what people said about Auckland, boo hoo immigration driving people out of Auckland, then the people started going to surrounding towns, driving out those poorer folks and pushing up prices… even Rotorua, Tauranga now struggles with rentals. Little towns being bought up by foreign buyers. Queenstown for foreign buyers and wants exemptions to keep their luxury prices while low wages for the service workers!

    • Graeme 5.2

      Yeah, exactly.

      And less than the Central Otago price. 91 at $2.39 pump price today. And bear a thought for the good burghers of Haast, stick another 20+ c on top of that, and it’s a couple of hundred km to go to the supermarket.

      And there’s only a public transport option once you get into Queenstown.

  6. saveNZ 6

    Perhaps it would hurt less if government wanted to tax industry and developers more as they pollute or offer some carrot for the poor rather than the neoliberal dogma of taxes as the only way for social progress.

    In many ways I’m all for increasing the cost of petrol but where are the alternatives. Public transport is a joke, not just the costs but the times it takes to get anywhere.

    The problem is that we have dysfunctional everything else from Auckland Transport who also take up the lion’s share of the ratepayer budget of 54% while delivering the worst service possible.

    Would love to see the wage and consultant bills for Auckland transport. Then work out what percentage of that actually does the transport aka the bus drivers, train drivers and ferry drivers. I’m sure would be illuminating as where the costs are coming from!

    Even the HOP card is such a joke. So big can’t even fit in your wallet it’s like a brick cell phone from the 1980’s of cards, and $10 an outrageous price. That’s $40 for a family of 4 and they are designed to be lost because of their aforementioned size which makes them cumbersome to keep on you.

    Hopefully the commerce commission gets involved in AT for deceptive pricing because I notice they always quote the HOP price on their crap website that when actually no mention of the $10 HOP charges on top and you can’t buy them on the buses or trains.

    As for trying to get a child HOP, forget it, who knew AT were so focused on child fraud. Of course due to their high pricing families (huge charges x 4) can’t afford to go by public transport anyway maybe repelling people is part of the punishment for the poor? Ha Fuck you poor family, from AT!

    • dukeofurl 6.1

      I just checked and AT Hop cards are ‘exactly the same size’ as my Eftpos card.

      If you are going to do an anti public transport rant at least get some basic facts right

      • saveNZ 6.1.1

        @dukeofurl Not the HOP I was sold, It’s way thicker and then thick plastic on top.

        It is not like an etffpos card at all apart from shape, about 5x thicker. So unless they changed it, I think you are misrepresenting the HOP as being like a normal card.

        Are you saying they don’t cost $10 and you can buy them on the bus too?

        Or you can get a kids card from the shop?

        Or the website prices the HOP card as well, when they quote the HOP price for every journey?

        • dukeofurl 6.1.1.1

          Why would they suddenly need a 5x thicker HOP card. ? Sim cards and smart credit cards are all same thick ness as HOP

          have you the secret version that tracks you as you pass each lampost ?

          • Tuppence Shrewsbury 6.1.1.1.1

            Facts and proof aren’t relevant when savenz tells a yarn.

      • JanM 6.1.2

        Not true – my HOP card won’t fit into my card wallet like my Eftpos card does – too big

    • Firepig 6.2

      My HOP card is exactly the size of my credit and similar cards, and fits in the pocket of the wallet designed for such. A friend recently had his old one replaced as it was delaminating, and made no comment about a change of size.

  7. AsleepWhileWalking 7

    Thank you to WCC who voted to get rid of our trolley buses.

    • dukeofurl 7.1

      It was the Regional Coucil not WCC. And they are supposed to be replaced by ‘wireless’ electric buses

  8. saveNZ 8

    You would also think the government would be conscious of not increasing the population because the congestion is rising, but not an issue if you are building a hotel on the waterfront or building luxury apartments that people can’t or are too scared to afford due to pitfalls (open mike post).

    Then the government allows open profiteering from industry aka welcome in 35,000 more low wage workers, hundred thousands more foreign students (not just tertiary either, not just secondary, one primary school in North Shore already touting for primary school foreign students to make money off). Obscene as they are then complaining about teacher shortages and falling OECD figures in education here, while attracting kids who speak little English and need additional support! Then the burgeoning tourism… big debate about $35 for a tourist to pay, fuck it, that’s nothing food just went up in Auckland $21, let alone everything else, from the start of the year! Government priorities are completely wrong in this country!

    • Ad 8.1

      This post is about the rise in fuel taxes.

      So if you are going to go off on a rant about government population control, low wage workers, foreign students, teacher shortages, tourism taxes, the price of food, and whatever other brain explosion you are having over your keyboard at the moment, please take it over to Open Mike.

      • saveNZ 8.1.1

        Hundreds more thousands of people bought in to solve all the other deliberately created problems = congestion and apparently this petrol tax is has been ‘marketed’ by government to ease congestion… there was a simpler solution for the problem but the government chose to tax the poor and working class while propping up AT instead…

        • Hanswurst 8.1.1.1

          […] there was a simpler solution for the problem […]

          Yes, I hear it was, “Ban all foreign nationals, here, and preferably abroad as well!”.

          Jesus H. F***ing Christ.

  9. cleangreen 9

    Ad; That picture says it all; – “trucks trucks and more trucks.

    I used to drive a car between Toronto and Fiorida six times a year for five years from 1993 to 1998.

    During this time we never once saw any much higher price difference between Diesel and petrol as we see here.

    Now here it is around $149 for a litre of Diesel and $2.15 per litre for petrol.

    At these current prices, petrol is now at nearly 50% higher than diesel.

    The cost in the US now averages at around $83c US per litre Aust/Canada @ $1.14/@1,12 respectively. https://www.globalpetrolprices.com/gasoline_prices/

    While diesel prices for those groups are around US $84c US/ Australia @ $1.14. /Canada % $1.1 US which shows all are only fractionly higher for petrol over diesel. https://www.globalpetrolprices.com/diesel_prices/

    So as said we never saw these price diferences anywhere else including Australia, so we are at a loss to figure why the cost of diesel is so low here compared to petrol.

    Maybe they need to “align petrol. and diesel cost closer together in line with the rest of the developed world.

    Right now trucks benefit from cheap diesel in NZ relevant to petrol prices, but the cost of petrol may well be adjusted down if diesel is placed in line with petrol and perhaps then most trucking companies may switch their freight customers to rail giving them a cut in freight costs at the same time.

    In HB/Gisborne truck companies now are keen to switch to rail for moving their freight to offer their customers options to moving freight and lowering the cost for customers.

    This is what we are hearing now inside the road freight industry, because as the new changes that will come from the completition of the ‘climate change comission study and recommendatiioons given to Government and the future introduction of the “Zero carbon act” will change the cost of all forms of freight travel cost.the road freight are moving to change the way they need to move freight in future.

    This new Zero carbon Act will drive up the cost of road freight as it has been established that the truck freight ‘Carbon footprint’ emission rates are far higher (5 to 8 times) higher than the rail emissions rate comparrision are at moving each tonne/km the stats shows.

    • alwyn 9.1

      The main difference between New Zealand and the other countries you mention is the way that the taxes are paid.

      In New Zealand you pay all the motor spirit taxes in the price at the pump. With diesel fuel you pay some taxes in the pump price but you also have to pay Road User Charges. For a small vehicle, like a car, that is $62.00/thousand kilometres. It is more for larger vehicles.
      If you are using, say, 6litres/100k then you will use about 60 litres for that 1000 kilometres and the RUC will equate to about an additional $1.00 for each litre of fuel. You will really be paying something like $2.49/litre of diesel used.
      In the other countries all the taxes for both motor spirit and diesel are paid in the pump price.

      You say “so we are at a loss to figure why the cost of diesel is so low here compared to petrol”.
      Does what I say make the difference clear?

    • Ad 9.2

      The illustration was from the truckie and freight industry trike against the Clark government proposing to raise RUC charges on diesel which would have made the price closer between petrol and diesel.

      The protest was such that the Clark government prompt reversed its decision and stopped it.

      The issue in the post I am highlights is precisely the political cost that is about to come.

      • Graeme 9.2.1

        This transition from National to Labour seems to be smoother than 99, there ‘s not the vitriol around business like 99, sure it started with the crap around Clarke Gayford, but that went away very smartly and it’s been seen for what it was.

        But you’re getting a bit ahead of the game with this one. All the Regional Fuel Tax is doing is lifting fuel prices in Auckland up to the median price of the rest of the country. In a couple of months you jaffas won’t know any different and think you are paying the same as everyone else. Competition, and economies of scale will keep fuel prices the same as the rest of the North Island, and at least 10c/l cheaper than anywhere in the South Island.

        Then Auckland will start to see the roll out of some good infrastructure and the rest of the country will be quietly rolling out their own regional fuel taxes to fund much needed infrastructure around the rest of the country. Noticed that NZTA are signalling a cut in regional road funding subsidy, so District Councils are increasing spending on subsidised roads to get in while the funds are there.

        https://www.odt.co.nz/regions/queenstown/qldc-acts-plan-feedback

        “Investment in both the Crown Range Rd and Glenorchy Rd has been increased to take advantage of NZTA special funding rates before they are reduced.

        So maybe there’s going to be a move to have district and regional level infrastructure more regionally funded. i don’t see that as such a bad thing, provided the funding stream is secure and transparent, which the Regional Fuel Tax appears to be.

        User Pays, isn’t that what the RWNJs have been screaming form the rooftops for the last 30 years.

  10. Bearded Git 10

    the poor use public transport so these petrol price rises are not negative for the poor providing they are used for public transport.

    Anything that reduces the use of oil, which these price rises will do, is positive in the battle against global warming.

    The nz dollar is dropping against the us dollar but is actually holding up pretty well against other currencies

  11. Pat 11

    The purpose of taxation is to modify behaviours…..with a portion of these latest increases attributable to the various taxes (although most is market impacts) the obvious desired impact is a reduction of fuel use…..people will start to consider options like car pooling more readily now, or plan their use more prudently…especially if there is no alternative available.

    Is that such a bad thing?

    Its also worth remembering there is a significant improvement in transfer payments about to come into force (WFF)…there will likely be others.

    • Poission 11.1

      The purpose of taxation is to modify behaviours

      The reality ie outcome is always greater complexity (read inequality)

      https://files.taxfoundation.org/legacy/docs/Tax_Complexity_Keeps_Piling_Up_Web.png

      eg Haldane.2013

      What is true of financial regulation is true too of tax. For example, studies have analysed the incidence of tax evasion and avoidance across different countries. They have found that the single most important determinant of tax evasion is often the complexity of the tax code (Richardson (2006)). The greater the complexity, the more numerous the loopholes, the greater the incentive and means to exploit them.

      Third, complex regulatory frameworks tend also to be inequitable. They advantage those best able to exploit the cracks, navigate the uncertainty, squeeze through the loopholes. This tends to be those with the
      deepest pockets who can afford the most sophisticated risk-modeller, the slickest tax accountant.

      Complexity, in other words, acts like a regressive tax

      • Pat 11.1.1

        And your point is?….it was never claimed to be a progressive tax…although there could be elements of progression argued…as could the claim of complexity (and thats not to argue that complexity can act as a regressive tax, as I agree that it can and frequently does so)

    • Ad 11.2

      Even if modifying behavior was the aim of this tax, it won’t work and so far hasn’t worked.

      In fact the purpose is to raise funding for transport projects. These projects taken as a program, once completed in a decade, certainly provide choice, but are by no means guaranteed to decrease the percentage of Aucklanders’ daily trips taken by private car compared to public transport. In a good scenario they are running to stand still even when total pt trips go up hugely. GreaterAuckland site has done a couple of these.

      • Pat 11.2.1

        By their own admission these taxes barely touch the funding required for the transport/infrastructure required, they could be described as a partial cost recovery at the most generous….and the funding could be provided otherwise without the inherent inflationary and consumption impacts…its primary aim is behavioural, not economic.
        Whether it will work is a whole other argument..

        • Ad 11.2.1.1

          The fully funded Government Policy Statement was released on Thursday. This takes all projects out to 2028.

          The Auckland Council RLTP and LTP was confirmed a few weeks ago.

          You can get a pretty clear idea where and when each project will be delivered from ATAP and the NZTA draft investment plan released the previous week.

          Between government and all Councils, that is how they fully fund what they all agree to do.

          The final of this investment plan – which covers the whole of New Zealand – will be released on August 31st.

          • Pat 11.2.1.1.1

            You can indeed….in Auckland Councils case it amounts to 1.5 billion of a 28 billion spend…and I have no problem with that but reiterate the funding could have been provided differently by the central gov….it is a problem that no politician can ignore (and hope to gain the Treasury benches)

            • Ad 11.2.1.1.1.1

              The spectacularly unfunded chunks are the light rail lines going up to Kumeu and out to the airport. Those will require something pretty special to make happen.

  12. Ross 12

    I was in Australia recently and the price of petrol at the pump was about $1.30 a litre. What are they doing that we’re not? I note that there is a wide variation in petrol prices in the same area there, which doesn’t seem to be the case here. Is it simply competition or is something else at play?

    https://www.comparethemarket.com.au/fuel/

  13. Ad 13

    Here we go.

    Queues forming outside petrol stations.

    Now wait for the lead item on the tv news tonight.

    https://www.nzherald.co.nz

    • Graeme 13.1

      Just like Budget Days of old…

      I can remember queues for petrol, fags and booze, then the tax didn’t go up…

      Knew a few who dealt in those commodities who would put extra staff on for the Budget, and confidently say that the tax was going to go up this year…..

      • joe90 13.1.1

        I can remember queues for petrol, fags and booze, then the tax didn’t go up…

        Really.

        When?

        • Graeme 13.1.1.1

          In 60’s and 70’s.

          Can remember a classic on one of Muldoon’s latter budgets, 81 or 82, a rumour went around the town I was in that taxes were going up, everyone was stocking up. That was the year he outlawed inflation with price controls.

          It was sort of a learnt behaviour, most likely going back to the Black Budget, people expected taxes on those things to go up (they never seemed to go down) and lived accordingly. When budgets became more open and pre-announced it sort of went away, but it will still be there in the deep recesses of our psyche.

  14. Craig H 14

    I’d like to see the funding cap for public transport increased from 50%. Part of the issue is that public transport is expensive relative to driving a car, particularly for a family, and decreasing fares would be helpful.

  15. Timeforacupoftea 15

    The stupidness of tax’s on grog, ciggee’s and fuel and then future sugar taxes only causes inflation, then we all get it back in wage increases including beneficiaries and NZ Superannuation.
    Just shows how out of touch politicians are, and especially The Wonderful Green Party of NZ, bloody nutcase’s !!

    You Beauty Taxcinda !! you are amazing, just a pity you never held a real job in your vey short life !

    Even better for me as I work and are on NZ Superannuation and get a double up in my increase due to INFLATION, thanks Taxcinda and The Green Party.
    Dumb arsses !

    I will vote foe you guys forever.

    • millsy 15.1

      I wish you are as passionate about landlords jacking up their rent, or power companies jacking up their price, which hurt the poor way more than these taxes you and your right wing buddies carry on about.

  16. Chris T 16

    Twyford saying the fuel tax is higher for rich people than poor people was one of the stupidest things I have seen in a long long time

    • Tricledrown 16.1

      Rich people do way more driving and have bigger more powerful cars.
      Getting stuck in gridlock will cost more
      Just idling your car.
      Higher fuel prices will make people more careful on how they use their cars.
      Last time fuel prices went up the number’s of car’s on the road reduced dramatically.

      • Timeforacupoftea 16.1.1

        ( Rich people do way more driving and have bigger more powerful cars. )

        Don’t count on that.
        I know of heaps of Pacific People ( just by a chance meeting below ) that drive old Fords and Holdens.
        They also like the five and six cylinder Honda’s plus other large vehicles that have appalling fuel consumption.

        I was at the Auckland Airport two months ago and one guy told me they don’t get a train to work cause some would have to get two buses and a train and then walk at both ends. Time is better spent in slow traffic and listening to the radio or favoured music still beating public transport to destination by 45 minutes.
        He said nothing will change with him or his work mates, he also said I got to hang onto this job as long as he could or his family would fall into poverty, his only wish was his kids would get a job.

    • Rozgonz 16.2

      What did Mrs Gump say – stupid is as…..

  17. Tricledrown 17

    People will ditch the gas guzzling old bangers for more modern safer more fuel efficient cars!

  18. Patricia Bremner 18

    Bill that is a great idea. See the “Cool Cube” portable personal airconditioner that uses 20 oz of water over 8 hours and can be run from a usb.
    Things are happening.

  19. Rozgonz 19

    Last election day 91 unleaded petrol in my nick of the woods was $1.79 per litre. Now it is $2.24. Thanks Jacinda and co, thats a vote loser if ever there was.

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