Will skyrocketing fuel prices ever return to normal?

After the price of 91 octane fuel reached an all-time high in 2021, Kiwis could be in for some reprieve this year.

In late 2021 the national average of 91 was $2.39 per litre. In Auckland, as of early 2022, it's as high as $2.70, according to price-tracking app Gaspy. 

The Automobile Association (AA) believes prices will remain stable during the first few months of this year. Better still - an easing in prices could follow that.

But that's about where the good news ends. Terry Collins, a principal policy advisor at the AA, warns prices will rise again in the long-term - and the days of cheap oil will "come to pass".

What has pushed up fuel prices?

The AA believes petrol prices are, in short, being driven up by energy shortages.

"Initially COVID and lockdowns hammered demand, where at one point oil was given away for the first time ever as there was not enough storage to hold what was been exploited. That caused massive cuts in production," Collins says.

"As countries came out of lockdown and economic activity increased, it did at a rate faster than production.

"This was further exasperated by coal shortages and then gas storages as the Northern Hemisphere came into winter and demand increased for electricity."

Collins says petrol prices will be volatile over the next few years given a lack of new natural gas supply. As a result, oil prices will be put under pressure, he says. 

"Longer-term oil prices will continue to increase as the decade passes. By then we will be exhausting the source of cheap oil.

"In 2022 they [prices] will be at the mercy of COVID variants and the impact they have on economies and lockdowns.

"[It's] very hard to predict as there is so much uncertainty."

With that uncertainty in mind, Collins urges people travelling to and from their holiday destinations this summer to continue shopping around for cheaper prices.

"Prices fluctuate within cities and towns so look for the best deal," he says. "If you are going on a long trip, use an app like Gaspy that will have the price of fuel along your route."

Will skyrocketing fuel prices ever return to normal?
Photo credit: Getty Images

What you pay for petrol at NZ's holiday hotspots

Just spent New Year's on the Coromandel Peninsula and looking for the cheapest place to fill up? The place to go is New World Whitianga where 91 is $2.45 per litre at the time of publishing. 

That compares with Coromandel's most expensive price of $2.64, according to Gaspy.

In Taupō, the cheapest price of 91 is lower - $2.45 at Gull on Rifle Range Rd as of this week.

Sunny Napier's cheapest petrol prices are at Allied on Hyderabad Rd - $2.41 per litre for 91.

Looking for the cheapest retail price per litre of 91 petrol in Queenstown? Head down the road to nearby Arrowtown where you'll find it there for $2.56.

Gaspy says cheaper prices in Nelson can be found at the NPD self-serve station on St Vincent St - $2.44 per litre for 91 octane.

Whether you're returning home from your summer break or just leaving for a post-New Year holiday, the AA has a couple of final pieces of advice.

"Think about stopping for half a tank of cheap fuel along the way instead of getting to your destination to fill up at a higher price," Collins says.

"Stopping for fuel is also a good time to have a break, have a bit of rest and restart your journey refreshed and concentrating."