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Groundhog Punxsutawney Phil with his handlers - Source: Reuters -
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Over the past few weeks I've often felt like I've had some sort of cameo in the movie Groundhog Day.
I can't count the number of times I've uttered variations on the phrase "The kiwi dollar has hit another new high, yes - another".
At first the repetition had a feeling of deja vu - we went through all this about three years ago, but then the dollar tanked.
This time around, the currency has gone higher and stayed longer and seems to have little cause to give up its phenomenal gains anytime soon - though I would be remiss to not point out that on a trade-weighted basis it's not as high as it was back then.
On his trip to the US this week, the Prime Minister told its Chamber of Commerce the heights the kiwi is scaling is "going to dampen our economic growth if we can't get it under control".
The problem being, most of factors driving the currency to these unprecedented post-float levels are not ours to control.
At the moment it seems every issue is undermining the strength of the US dollar.
A losing battle
The prospect of the stuttering US economy requiring further stimulus - and the very suggestion the Federal Reserve stands ready to provide it - undermines the US dollar.
The quibbling and politicking over the looming US Government's $14.3 trillion debt cap and the prospect of a credit rating downgrade has hit the dollar.
Then the possibility that the woes in the euro zone over its debt may finally be coming to an end, with a deal in sight, then gave investors the confidence to ditch the US dollar in favour of the likes of the kiwi.
It seems we can't win.
Our better-than-expected growth of 0.8% in the first quarter - a good sign about our economic health - drove the kiwi dollar up.
Figures showing inflation at a 21-year high of 5.3% drove it up further and the dollar barely blinked when prices on Fonterra's closely-watched online auction fell for a third consecutive session.
As cliched as it sounds, clearly some are looking for the silver lining.
It's obviously great if you're about to head overseas on holiday, or if you're in the market for a new telly - the price of imported electronic goods has fallen sharply according to the latest data.
At the pump
In that context, it's no surprise that every time the kiwi has hit a new high it's triggered email from people who'd been doing back of the envelope calculations to make sure the benefits were being passed on at the petrol pump - but felt as though it just didn't add up.
The most common complaint is that petrol companies are quick to hike prices when oil prices rise or the dollar drops, but slow to drop them when foul winds turn fair.
Petrol pricing is economics for real people - it affects everyone, be it directly or indirectly.
Oil companies generally get a bad rap, but to their credit this week BP came on AMP Business to answer some of our questions about how they set their prices and why prices aren't lower.
We asked our regulars at OM Financial to run some numbers for us and we established this: In early May the price of refined oil that the petrol companies buy from Singapore - in New Zealand dollars - was $170 a barrel.
By Thursday this week, again in New Zealand dollars and thus taking into account the rally in the currency, it was $143 a barrel - that is a 16% drop.
Over the same time period regular 91 octane petrol has gone from $2.21/litre to just under $2.10 - that's a drop of just 5%.
I put those figures to Diana Papadopoulos from BP, but I'm not sure how much we really learnt from her.
She said the perception that they are fast-to-hike and slow-to-cut is a misnomer and said the media fuels this.
She rejected outright any suggestion that the fact most companies move their prices by the same amount at the same time is an indication of anything other than that they all face similar costs.
She also pointed out a number of things we already know - including that taxes make up nearly half of the price we pay at the pumps.
Even taking that into account though, the numbers would suggest prices could have come down further.
Later that day, they did. BP cut prices by 3 cents a litre.
But I think in the eyes of motorists it is too little, too late.
Petrol companies are fighting a public relations war - and they're losing. Admittedly, as oil prices rise they face an uphill battle - no one likes prices rising when it's something that's so hard to do without.
But the perception that prices are higher than they could be appears well entrenched, even if BP and the other oil companies maintain it's just that; a perception.
Viewer feedback seems to disagree.
"With record profits I certainly don't believe the fuel companies have passed on the appropriate oil price drops but have retained higher profit margins," one person wrote in after our interview.
"They are extortionists taking advantage of people's basic needs and lack of options," responded another.
Perception, right or wrong, is reality for those consumers.
Oil companies can chose to be a bit vague in their answers and explanations about what influences their prices, but they, like all other companies, should disregard their image in the eyes of their customers at their peril.
While they worry about that, I'll get out the thesaurus to find some new words to describe that rising dollar.
Because otherwise we could well be hearing the line "another new high for the kiwi dollar" for a long time yet.
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Add a Comment:
Post new commentnztifosi said on 2011-06-03 @ 17:26 NZDT: Report abusive post
Just when my family was making headway financially the government chose to cut tax and put GST up. At the same time funding to the school I work at was cut resulting in an hours cut for me. Result? We are now worse off than ever before! And now we are supposed to spend, save, donate to Canterbury and every other charity as if the current situation were the working man's fault. It is the speculaters and the financiers along with the government who got us into this mess! -now they can get us out!
deltics said on 2011-05-19 @ 12:38 NZDT: Report abusive post
Saving isn't what NZ needs right now, it needs to pay off it's debt AND increase spending. Money paid into KiwiSaver doesn't reduce our current debts and doesn't circulate around or stimulate the economy! So it actually makes a lot of sense for the government to reduce the incentives to pay into KiwiSaver whilst emphasising the need to be more prudent in our spending (paying down debt) without closing our purse strings too tightly in the process.
ceejaygee said on 2011-05-15 @ 12:33 NZDT: Report abusive post
i currently pay 4% into kiwi saver i would like to pay 6% unfortunately there is no provision for that hopefully the govt have thought about that. as to the tax credit cut not a clever idea, maybe they could make it totally tax free then we could really save for our retirement then they could cut the tax credit altogether
Danthetaxpayer said on 2011-05-14 @ 19:10 NZDT: Report abusive post
I would also like to ask how is it retirement savings are even a priority when we fail so badly as a country to take care of our children? Children who are meant to be our future taxpayers helping to fund future NZ Super? Children who are often neglected, illiterate & who struggle to get the medical assistance they need due to health care shortages and whose families often have to fundraise? Why are these things not a priority?
Danthetaxpayer said on 2011-05-14 @ 19:07 NZDT: Report abusive post
I'm confused: how is it saving when most of the 1.67 odd million people with Kiwisaver are probably receiving some kind of government assistance. Assistance is for hardship and to meet basic needs - food, clothing, shelter only. If they have enough spare to put into Kiwisaver which then gets matched by more taxpayer funds earned by the hard work of others, then isn't this the horse before the cart? Further, how can it truly be savings when we are borrowing $300 million each week?