While the New Zealand transport industry enjoys price stability at the pump, international fuel prices remain extremely volatile, the Road Transport Forum tells DIESELtalk.
International crude oil prices continue to fall on the back of lower demand from Europe and Asia, while oil production has increased, but at same time the Kiwi dollar has also fallen, which has lead to stable prices – but the situation could be much different.
“We have a weaker dollar buying a cheaper product, so prices remain stable as the two factors of price and currency offset each other,” says Road Transport Forum chief executive Ken Shirley.
Shirley says that international fuel prices remain extremely volatile and he believes the longterm trend is that the diesel prices will increase.
“If crude oil prices had risen against the current fall of the New Zealand dollar, then we’d be in a terrible state,” he says.
According to Shirley, fuel costs account for between 15% and 20% of the cost of road transport, depending on the circumstances.
Oil producing nations have indicated they won’t cut supply as global demand drops, and prices are now at the lowest point since November 2010.
A split in the ranks of the Organisation of the Petroleum Exporting Countries (Opec) between the low-cost Gulf oil-producers and the high-cost producers, means that the cartel won’t reduce production as it would normally do in this situation.
Saudi Arabia which is the biggest Opec oil producer has indicated it’s comfortable with lower prices.
The Paris-based International Energy Agency (IEA) has cut its forecast for growth in oil demand by 22%. It now forecasts a demand of 700,000 barrels of oil daily for 2014, a 200,000 a day reduction over previous forecasts.
The IEA says oil production surged last month. Opec pumped more oil than it has in 13 months, and non-Opec producers added 2.1 million barrels a day in the period, more than 2% of global daily demand.
