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BP and Z Energy drop price of fuel

Published: 12:40PM Monday June 27, 2011 Source: ONE News

BP and Z Energy have both dropped the price of fuel.

Z Energy, which owns Shell and Z, announced it had cut 5c a litre from diesel and 2c a litre from petrol, earlier today.

BP Managing Director Mike McGuinness said there has been a decrease in the price of crude oil, which has flowed through to the price of refined petrol and diesel.

"The cost of refined fuel has eased.  We're pleased to pass on this welcome relief to motorists," he said.

The new prices are:

Ultra / 91 Unleaded 205.9 (down 2c)
V-Power 212.9 (down 2c) / 95 Unleaded 213.9
Diesel 145.9 (down 5c)

The drop follows a prediction by a global market expert on Friday.

Kevin O'Sullivan, of global dealers OMFinancial, told TVNZ that Kiwis should be paying less than $2 a litre for 91 octane.

Consumer watchdog the International Energy Agency unexpectedly released emergency reserves last week which has sent crude oil prices down around 6% to a four month low with Brent near $US107 a barrel.

But O'Sullivan argues that even before that surprise move a cut was due: "We should be getting some relief at the pump," he told AMP Business.

His calculations suggest that even before crude prices dropped, the cost of refined fuel - in New Zealand dollars - is down 16.5% from its highest-ever point.

Refined fuel, rather than crude oil, is what oil companies in New Zealand buy overseas to supply their service stations.

"Unleaded petrol hit $2.22 at its high so 16.5% off that, then rough maths makes it like $1.85, so we should be under $2 a litre," he said.

O'Sullivan said he does not expect prices to fall as low as $1.85 but there should be a cut "in the next few days".

He actually picked Z Energy, the new owner of the Shell stations, to lead the way with a cut.