Petrol price rise soon?

Press, 28 May 1981, Page 1

Petrol price rise soon?

New Zealand may face another increase in the price of petrol in the next few months in spite of a six-month price freeze agreed to by members of the Organisation Of Petroleum Exporting Countries. Under the agreement. Saudi Arabia, the O.P.E.C.’s biggest producer, can increase its prices by SU'S4 a barrel to $36 at any time before the next O.P.E.C. meeting in December.

Saudi Arabia supplies New Zealand with about half of its SNZISOO million in oil a year. A

SUS 4 price increase by Saudi Arabia would add about SNZBO million to New Zealand’s oil bill. The O.P.E.C. members decided to freeze oil prices because of an oil glut in the world market. Most members decided to reduce production by 10 per cent.

When the next round of talks begins in Abu Dhabi in six months, oil supply and demand are expected to be back in equilibrium because of the cut in supply and increased demand in’ many Western countries as they emerge from recession.

Demands then by hawkish O.P.E.C. members for a further price increase and a greater demand for oil are expected to bring about another series of price rises: The New Zealand dollar’s poor standing against the American dollar 'will .affect New Zealand’s purchasing power and will help to put up the price domestically. Petrol resellers also seek a bigger margin to cover costs.

However any price increase during the next few months is expected to be small.

The Prime Minister (Mr Muldoon) said yesterday that early this year he had said that the price of oil .would probably rise this year by about 12 per cent and it now looked as though ' the increases 'would not be any worse than that. Much of- the Governmept’s economic thinking had been based on that kind of situation. Asked how O.P.E.C.’s pricing decisions might affect the price of petrol in New Zealand, Mr Muldoon said that he thought the New Zealand pricing pool account was “all right.”