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Crude oil and refined oil products are traded on international markets in US dollars. These markets are influenced by a number of factors including global supply and demand and manufacturing capability.
Refineries purchase crude oil on the international market to make it into refined oil products such as petrol and diesel. Refined oil products are also traded on the international market and have their own pricing. The international refined price for petrol and diesel is typically higher than crude oil, which reflects the additional cost of converting the unrefined product into the refined product that you can use in your vehicle.
bp prices its products based on refined product prices. Although the cost of crude oil is a factor in the cost of refined petrol or diesel, they are not intrinsically linked. The market prices of crude oil and refined product can each be influenced by different factors, therefore international refined fuel commodity prices may not move in line with crude oil.
Exchange rate fluctuations are a significant factor, often overlooked, when comparing NZ pump prices with international barrel prices. Refined product prices (and crude product prices) are set in US dollars so any drop in refined petrol prices can be quickly offset by declines in the NZ dollar.
The cost of shipping also has an effect on the price of fuel at the pump because bp imports and ships product to the port network around New Zealand.
A significant component of the price you see at the pump is taxes, duties and levies. These are set by the New Zealand Government.
Visit the Ministry of Business, Innovation and Employment website for more information on fuel taxes, including excise duty, ACC levy, GST and the differences between petrol and diesel.
A carbon component was added to the price of bp fuel to meet the industry’s requirements under the ETS in 2010.
Under the law, many businesses are required to surrender emissions units (sometimes called carbon credits) to the Government to cover the CO₂ equivalent emissions (often referred to as carbon emissions). The quantity is calculated using a formula set in regulations.
While bp independently sets a national price for company-owned stores, we can often change our prices in different locations to ensure competitiveness in the market. This may sometimes lead to price variations even within similar geographies, but this is the nature of competition.
We try to be as competitive as possible where and when we can, but unfortunately we can’t always match or sustain heavy localised discounting across the entire market or across our entire portfolio of products.
There are also a number of independent bp operators all around the country who set their own prices and manage their own operations.
bp buys products every day and places them into storage all around New Zealand. Because of this, it is very difficult to tell when that one litre of product you are putting in your vehicle was purchased. To ensure a level of consistency in how we price our products, we look at our prices every day and use the daily barrel price (refined product) and current exchange rate amongst other factors to help inform our decisions. The same process occurs when barrel prices go down.
In short, we calculate how much it would cost for us to buy refined oil products today to replace what is in our tanks.