If you're running a business that depends on fuel, whether it's a farming operation, a transport company, or a building contractor, you've probably noticed that your fuel costs can swing significantly from month to month. Understanding why prices move the way they do can help you plan better.
What Drives Fuel Prices in New Zealand?
Global Oil Prices
New Zealand imports virtually all of its refined fuel, which means our pump prices are heavily influenced by global crude oil prices, as well as refined product prices. These fluctuate based on global supply and demand, decisions by oil-producing nations (particularly OPEC+), geopolitical events, and economic conditions.
The NZD/USD Exchange Rate
Because oil is traded in US dollars, the exchange rate between the NZ dollar and the USD directly affects what we pay. When the NZD weakens against the USD, fuel costs more in New Zealand even if the global oil price hasn't changed.
Fuel Taxes and Levies
New Zealand fuel prices include a range of taxes and levies, excise duty, ACC levies, and the Emissions Trading Scheme (ETS) cost. These are fixed components that don't change with the oil price, which is why you'll notice that even when oil prices drop significantly, pump prices don't fall by the same proportion.
Regional Factors
Auckland has an additional regional fuel tax. In other parts of New Zealand, including much of the South Island, transport costs to deliver fuel to more remote areas can affect local pricing.
How Can Businesses Manage Fuel Cost Volatility?
Track your fuel spend month-to-month so price movements are visible in your data
Consider forward planning on bulk purchases when prices are lower
Use a fuel card to consolidate spend and make it easier to analyse costs
Build a FAF (Fuel Adjustment Factor) into your rates to account for fuel price risk on longer-term quotes and contracts.
Talk to your accountant about how fuel costs are tracked and whether there are tax efficiencies available
Talk to the RD Petroleum team about your business fuel needs, call 0800 44 00 14 or visit rdp.co.nz.
