Don’t switch to lower-grade gasoline to avoid price hikes, warns Motor Industry Association

The Motor Industry Association urges motorists not to be tempted to use inferior gasoline in an effort to save money in the face of record high prices.

Some gas stations ran out of gas and prices rose at others on Friday after long queues formed at stations across the country.

This followed the Waitomo Group’s announcement that it had been told by its supplier that prices would rise on Friday evening.

Reports from motorists and industry spokespersons suggested strong demand eased on Saturday, and several companies reassured the public that there was no nationwide gasoline shortage. .

* Petrol prices are suspended at Gull stations for the weekend, after a surge in demand at pumps
* Petrol station runs out of fuel as queues form across the country as drivers have been warned of rising prices
* Petrol prices around Taranaki Maunga continue to climb

Motor Industry Association chief technical adviser Mark Stockdale said owners of cars requiring premium fuel, such as 95 or 98 octane, risk long-term engine damage if they use lower quality than recommended.

“It may be tempting to use 91 octane to save a few bucks, but that’s a false economy. If you use a lower grade than required, it could end up costing far more than any fuel price savings. »

About 20% of new gasoline cars sold required a minimum octane rating of 95, he said.

Waitomo Group chief executive Jimmy Ormsby said advising drivers to refuel on Friday before prices rise was not intended as a marketing gimmick, and the company believed it was doing what was needed by giving people the opportunity to fill up beforehand. had to raise their prices.

On Friday, queues lengthened in the street for this 24/7 Allied gas station in Invercargill.

Kavinda Herath/Stuff

On Friday, queues lengthened in the street for this 24/7 Allied gas station in Invercargill.

“We have been struggling for some time to keep our prices low in the face of rising global crude oil prices and domestic inflationary pressures. The spread had become quite significant so we had to relocate, but wanted to give a warning.

Waitomo had a low-cost business model that allowed them to manage their margins effectively, he said. “I hope this will allow us to keep our prices as low as possible for our customers.”

Although some of its stations are still running out of fuel, that was to be sorted out later on Saturday.

While prices have been hiked by many companies, including Waitomo and Z (which also operates Caltex), prices have not skyrocketed across the board.

Gull’s director of retail operations, Mike Turner, said that while oil prices have been volatile over the past few weeks and the company plans to revise prices next week, it will hold prices on hold for a while. the weekend.

The gaspy fuel search app had the average national price for 91 at $2.95 a liter and $3.14 for 95 on Saturday. These prices were 31.73 cents and 38.46 cents higher than 28 days ago.

Queues at the Waitomo Wellington petrol station ahead of Friday's price hike.

Ross Giblin / Stuff

Queues at the Waitomo Wellington petrol station ahead of Friday’s price hike.

On Saturday, Waitomo Frankton in the Waikato had one of the cheapest prices for 91 in the country, at $2.10 a litre, according to Gaspy.

Gareth Chaplin of the Institute of Economic Research, said Waitomo was a sensible, grounded company, and was probably as surprised by the reaction to its announcement as everyone else.

Oil prices were at near record highs, due to continued turmoil in the industry, and the war in Ukraine had come at the worst possible time, he said.

“Everything could explode, and if the Ukrainian crisis is resolved in the next two weeks, we could see prices go down, but at the moment the prognosis is that prices are likely to remain high for the next few months.

The Motor Trade Association’s energy and environment sector manager Ian Baggott said the impact of Covid was also being felt with fuel suppliers.

During Covid, demand plummeted and that led to suppliers lowering production in response, he said. “Now normality is returning to the world, demand has increased and orders are increasing, but refineries are reluctant to increase production until they have more certainty.”

That meant the industry was in a transition phase and the Ukraine crisis was adding pressure on supply and costs, he said.

Gasoline prices are expected to continue to rise.

John Bisset / Stuff

Gasoline prices are expected to continue to rise.

“If the government wants to provide some relief to motorists, it could consider reducing or eliminating the GST component of fuel, which is in addition to various other fuel taxes.

“But governments tend to say it’s too complicated to remove the GST on a particular product because it could create distortions and require more administration.”

Finance Minister Grant Robertson said on Thursday it was ‘not the end of the road’ for petrol and diesel price hikes, and the AA predicted petrol could hit 4 dollars per litre.

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