How fuel prices are set in New Zealand
The price on the pump sign is built from several parts. Some change every day, some change once a year, and knowing which is which explains why prices move the way they do.
The cost of the fuel itself
New Zealand imports all of its refined fuel. The starting point for the price is what refined petrol and diesel cost on Asian fuel markets, which is quoted in US dollars. When those market prices rise, pump prices usually follow a week or two later.
The exchange rate
Because fuel is bought in US dollars, a weaker New Zealand dollar makes the same fuel more expensive here. A small move in the exchange rate can shift pump prices even when world fuel prices stay flat.
Shipping, storage and distribution
Fuel has to be shipped to New Zealand, stored at terminals and trucked to service stations. These costs change slowly and make up a smaller part of the price.
Taxes and levies
Petrol carries fuel excise duty, which funds roads, along with other levies and GST. Diesel is taxed differently: most diesel vehicles pay road user charges instead of excise at the pump, which is one reason diesel is usually cheaper per litre. Tax rates are set by the government and rarely change week to week.
The retail margin
What's left is the margin kept by fuel companies and retailers. It covers running the stations and profit, and it varies by region and by how much local competition there is. MBIE publishes weekly figures that track this margin.
What this means for your fill
Taxes and costs are fairly fixed, so most short-term movement comes from world fuel prices and the exchange rate. Those changes take time to reach the pump, which is what makes a one to two week forecast possible.