NZ's petrol is fourth cheapest in the OECD as ETS looms

Monday 24th May 2010

New global comparisons of petrol prices show New Zealand has the fourth- cheapest petrol in the rich countries’ club, the Organisation for Cooperation and Development.

Analysis by the Ministry of Economic Development, based on International Energy Association data, found that the cheapest petrol, after government taxes, in the December quarter of 2009, was in the U.S., Mexico and Canada, where the tax component of the pump price is also the smallest.

Petrol in the U.S. and Mexico is about $1 a litre. It jumps closer to $1.40 a litre in Canada, and is above $1.70 in New Zealand, and slightly more expensive again in Australia.

The highest priced petrol was in Turkey, at a little over $3 a litre after taxes.

The findings come as opposition mounts to the government's determination to proceed with the July 1 introduction of an emissions trading scheme.

Adopting a low-rate emissions trading scheme from July helps New Zealand prepare for the inevitable pricing of carbon emissions throughout the world economy, Prime Minister John Key said today.

In a spirited defence of the ETS, which business, farming and climate sceptic lobby groups say should be scrapped, delayed or urgently reviewed, Key said the average impact per household of the ETS was not only "half of the cost under a Labour government", but only around $3 a week per household.

That was "an appropriate ask for a household to pay in New Zealand taking its early part in tackling climate change", Key said in his post-Cabinet press conference this afternoon.

Critics were "quite wrong" to suggest New Zealand was ahead of the international pack by introducing an ETS. Some 29 other countries had ETS's in place, while countries without them, such as Australia and the United States, were introducing regulations that had similar impacts on the price of carbon-intensive products.

The announcement in the Australian federal Budget this month that 20% of all Australian electricity should be renewably sourced would add around 7.1% to power prices - more than is expected in New Zealand from imposition of a $25 per tonne price of carbon on 50% of the emissions from electricity production, industrial processes using energy, and transport fuels.

"Around the world, whether it's China, the UK, the US, even if there isn't necessarily an ETS in place, there is regulation that forces (carbon emission) costs on consumers," said Key. "We believe that the right way to control emissions is through a price-based mechanism and we hold to that view."

New Zealand could either move gradually to include carbon pricing into the economy, or take a one-off price shock at some future time when it was no longer possible to avoid carbon costs.

"We still firmly believe that if New Zealand were not to play its part, there would be implications for the way our goods and services would be treated internationally," Key said.

Businesswire.co.nz

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