Fuel prices could rise over $3 a litre next year says AA

More fuel woes seem to be on their way for New Zealanders with the Automobile Association (AA) predicting a dramatic rise in prices at the pump from early next year.

The prediction comes as Saudi Arabia and Russia announced that they will be limiting their oil supply in rebuttal to the West’s sanctions imposed upon them. In doing so, this would drive fuel prices up globally.

Stuff reports that Terry Collins, AA principal policy adviser, said the oil giant’s actions won’t have much of an impact on prices for New Zealand in the short term but they will in early 2023.

He also said next year would likely see fuel prices peak due to myriad issues occurring at the same time. These range from geopolitical to domestic.

The New Zealand Government’s fuel tax cut is set to end in January 2023 which will be another contributor to the price hike.

By far the biggest impact on the price at the pump is what’s happening in Europe as it heads into winter.

From December, there will be less oil on the market as European sanctions come into play against the transport of Russian oil. Combined with an already high global demand for energy, the European winter will add to the need for oil, driving prices up further.

The increase to over $3 a litre is likely to happen between January and March and the only thing that will see it fall is a global recession, said Brad Olsen, infometrics principal economist, speaking with Stuff.