By Sam Olley of RNZ

An Automobile Association adviser says the end of fuel tax relief will mean chaos at the pumps.

The Government cut petrol taxes by 25 cents per litre in March as prices spiked.

Initially, it was a three-month measure, but was extended another two months in Budget 2022, and is due to end on August 15.

Pump prices were averaging just over $3 per litre for Unleaded 91 yesterday, according to price-tracking website Gaspy.

Automobile Association principal policy advisor Terry Collins said there would be an "unavoidable rush" before the 25 cents extra tax came back.

"This has got to be a difficult one for the Government - if it goes on in one lump then we can expect to have queues at the service stations, and we expect that some of them may run dry," he said.

"It's difficult for those oil companies to fill them [pumps] up quickly, because they've only got a limited amount of trucks and tankers to do that, and if it happened nationwide, that would put a strain on their logistics."

Energy Minister Megan Woods' office said she had not decided on a tax cut extension but was monitoring petrol costs.

Energy Minister Megan Woods. Photo / Mark Mitchell, File

Brent crude oil prices settled below US$100 a barrel yesterday for the first time in three months, and two days in a row today, for the first time in four months.

Collins said the market was currently "very volatile".

"Oil is a market where it has a lot of investors and basically gamblers who bet that the price of oil will be at a particular price sometime in the future," he said.

"A lot of those people have started selling very quickly because they're worried that there will be a recession and that the price of oil will drop. However, the demand has still been fairly consistent, and rather high, and supply is still tight."

Ministry of Business Innovation and Employment data shows the lowest petrol prices so far this year were in the first week of January when the average was $2.61 per litre for Unleaded 91 at pumps.

Collins doubted the average price of 91 petrol would fall below $2.90 per litre in Aotearoa, for the rest of this year.

"There are still very high refining costs, very high shipping costs, it's very difficult to get tankers to move the product, and the exchange rate is rather low."

University of Auckland Business School emeritus professor Basil Sharp said it could take weeks for Brent crude prices to affect what New Zealand consumers paid.

"The supply chain is just a cascading series of contracts, going right back to the producers of oil coming out of the ground, and so it takes time for that to work its way out."

The average New Zealand household spends 4.5 per cent of its income on petrol, according to Stats NZ.

Tough for motorists

Gull general manager Dave Bodger said his company's petrol stations would be moving prices down as soon as they can, depending on where international refined oil prices go.

Gull General Manager Dave Bodger. Photo / Andrew Warner, File

"I know what it feels like to be sitting there balancing your budget ... and all of a sudden you're spending $30 a week more on petrol and diesel just to get yourself to work. It's tough. We will do what we can."

He told Checkpoint the New Zealand market generally responds two days to a week after the Singapore market - the refined oil market out of Singapore.

He appreciated that it was expensive for the Government to keep the fuel tax cut going, but it was well received by motorists, he said.