Government under pressure to intervene as fuel prices creep towards $3 a litre

The Government's coming under increasing pressure to intervene with escalating fuel prices.

It comes as parts of the country are being forced to pay almost $2.50 a litre and motorists are getting fed up.

South of Levin this week, prices reached $2.30 for a litre of 91 octane fuel.

In Wanaka on Wednesday it was almost 15 cents higher. There are now suggestions it could reach $3 this year.

"I'd hate to see it happen [but] you can't say it's inconceivable. In fact right now, on Great Barrier Island or the Chatham's, it's already $3," said the Road Transport Forum's Ken Shirley.

But there is a silver lining - a price war has broken out and companies are competing for the driver's dollar.

On Tuesday, Caltex held a one-day promotion offering 10 cents off a litre, while on Wednesday it was Gull's turn, going two better with 12 cents off.

Gull says it can offer such low prices because of a no-frills approach.

"We don't have a flash office on Queen St, we run some of our sites unmanned, and we only have one point of fuel in New Zealand," said chief executive Dave Boger.

Companies Newshub spoke to say they're constrained by a weak New Zealand dollar, impending sanctions on Iran and the increased cost of crude oil.

But the Road Transport Forum says fuel companies aren't the only ones to blame.

"It's about 45 percent of the retail price is Government taxes, and they're the ones accusing the fuel companies of price gouging," Mr Shirley said.

Right now the Government's in the process of passing legislation to allow the Commerce Commission power to investigate how companies set their prices.

"We need to get the information to carefully consider any changes that need to occur," said Energy and Resources Minister Megan Woods.

But she said they're not having a discussion on changes to excise taxes on fuel.

So for now, motorists just have to hope the price war is not temporary.