Liam Dann: NZ Herald business editor at large on petrol prices being expected to drop

Good news for Kiwi motorists - they can look forward to lower fuel prices in the next few days.

The price of oil is at its lowest level in more than three years as fears about lower global growth combine with Opec plans to boost production.

NZ Herald business editor at large Liam Dann explains further.

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Episode Transcript

Speaker 1 (00:00):
Good news on the way for motorists, which, let's face it,
that's most of us, especially if you're listening driving home
right now. Our petrol prices are expected to fall in
the coming days as oil slumps and the key WE
dollar stabilizes. Limb Dan's, the Herald's business editor, at largely
good evening, Good Ryan, some good news for a change
for us.

Speaker 2 (00:17):
Yeah, and I like to write these things in a
way that makes it clear that they really should be falling,
and we should expect to see them fall the next
few days. So let's hope they do. It's a combination
of well, the main thing is that so the oil
price has fall into the lowest in three years, which
is quite a big slump in the past few weeks.

(00:38):
Actually you might not know that. Notice that at the
pump as much. You know, so our dollar has come
off a lot in the past say six weeks or
eight weeks or so, and that you know, oil has
traded in US dollars, So that affects the input price
for New Zealand, and that's part of the equation. But yeah,
with that, you know, brint crude slumping below US seventy

(01:01):
dollars a barrel you would, and then a dollar is
actually stabilized and gone up a little bit in the
past few days, it really should equate to some lower prices,
I would hope.

Speaker 1 (01:13):
Well I've got I've sold this to everyone.

Speaker 2 (01:16):
Yeah, yeah, well that's right. Well, we are dependent on
these big petrol companies that you know, they look, they
tell us, they pass it on pretty pretty well, and
Commerce Commission probably believes them.

Speaker 1 (01:30):
So we've got a couple of things at play, right.
You mentioned we've got the exchange rate that's stabilizing, but
then we've also got a boost in production from opet countries,
and at the same time we've got growth not being
that great.

Speaker 2 (01:40):
Yeah. So so, I mean Donald Trump came in promising
to bring down the price of oil. This isn't quite
the reasons that he would have wanted, but one of
the reasons is that when global growth looks like it's
going in the wrong direction, traders tend to sell off
oil because we're just not going to if the economy
isn't big, there isn't as much action in the economy,

(02:02):
you're not going to see as much use of petrol
basically motor you know, And so that's that's happened, and
so the tariff thing is weighing on the global growth story,
and so the investors are looking forward and going well,
they're not seeing so much oil consumption or fuel consumption.
And then OPEK, who is the organization that's sort of

(02:23):
dominated by the Saudi's Opek, plus it's got Russia in it.
They have after a couple of years of cutting back
on production, have This is sourced from Reuters, but that
Reuters says has got They've got three sources saying that
OPEK currently plans to boost production. So that means more
supply coming on less demand. And so the oil price

(02:44):
is slumped in the past few days. So some of
those reasons are not fantastic if you're thinking about global
growth and the fact that we want our you know,
exports booming and helping the recovery in New Zealand. But
you know, from an inflationary point of view, this is
the thing about economics, upsides and downsides. From inflationary point
of view, that's quite good. It means that less pressure

(03:06):
on domestic inflation, and obviously just quite good if you
kind of fill up for the weekend and going somewhere.

Speaker 1 (03:11):
Certainly it's interesting because that monetary policy statement we had
through from the Reserve Bank, the most recent one, and
there they listed as one of the risks our exchange
rate to inflation, our exchange rate plus the potential for
you know, all of this stuff to happen overseas and
petrol prices to go up, and we would be doubly
kind of hat.

Speaker 2 (03:31):
I guess they've got to look at that risk that
that was. I guess the dollar had been coming off
a lot at that point. It does seem to have stabilized.
The markets have turned a little bit against the US dollar,
and we've seen US bonds coming off a bit because
you know, they're genuinely concerned about what happens to what
Trump has called a bit of disturbance in the economy

(03:53):
that are around tariffs, and so that's a sort of
a headwind to US growth. And the US dollar has
come off a bit, especially against the European currency, but
that's benefited the New Zealand currency a bit. Look this
Wilburin right now, who's to say how long anything is
going to last. It could be the other way around
by the time I'm talking to you.

Speaker 1 (04:11):
No next, which is what makes it so difficult if
you're a business like the automakers. Thank goodness they've been
given thirty day reprieve. But I was listening to an
exec from an automotive company in the US saying, how
do you plan when you know you're purchasing your stock,
your labor. When are these towff's going to be here
for one year, two year, three year, two minutes.

Speaker 2 (04:33):
It's a huge amount of uncertainty. I mean, New Zealand's
facing it with agricultural exports. At the moment, I think
New Zealand's lucky. It's got great free trade agreements and
alternative markets, and there could be some you know, some
strange side effects. You know, if the US is US
beef's getting blocked in China, then it's probably good for
New Zealand. You know, it's very hard to see how

(04:55):
it lands. It is a big strange experiment right now.
And you know, let's hope that lends lends fairly well.
And want you know, New zealand economy is quite flexible,
and the dollar is a sort of a safety valve.
The fact that we have a floating dollar and we
can it's an economy that sort of self corrects around
some of this stuff, so that stuff's positive. If we

(05:16):
could just get a bit of growth going at the ground,
on the ground floor of the economy, they'd be all good.

Speaker 1 (05:21):
In the meantime, Chip gas everybody enjoy Liam Dan the
New Zealand Heralds Business editor at LART.

Speaker 2 (05:28):
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