Petrol under $3? How long will it last?

Petrol prices have dropped below $3 a litre in some places, but how long will it last?

Gaspy reports that the average price of 91 is now $3.23 a litre, down 4.5 percent over 28 days. But some stations are significantly cheaper.

Prices are still well up on before conflict in the Middle East broke out. Simplicity chief economist Shamubeel Eaqub said the average family would buy 45 litres of petrol a week. That cost a peak of $157 in the week of April 10, which had dropped back to $147 according to Gaspy pricing. But in February, it would have cost them about $114.

The cheapest petrol stations for 91 on Thursday were Tasman Epsom, in Auckland, at $2.925. It was closely followed by NPD Wiri, NPD Leamington, NPD Te Rapa and NPD Rangitikei St, all at $2.926.

NPD is running a discount day on Thursday, reducing prices by 15c.

Oil prices increased overnight on Thursday on reports that the US was preparing for a long blockade in Iran, which suggested that prices might start to rise again.

But AA petrol expert Terry Collins said the situation had become more complicated.

"There's a real disjoint between the price of oil and the price that refiners pay for their oil. What you're seeing at prices around $100 to $110 was future market and a lot of it was speculative. What they were actually paying at the refiners was actually something closer to $140 or $150.

"We were also seeing a couple of weeks ago that they'd really priced in risk. Diesel was up to $350 a barrel at Singapore at one stage, which was ridiculously high… we were paying high prices but there was a real disjoint between the price of oil and the risk involved from refineries to get it."

He said although oil had now jumped to $120 a barrel, a bigger concern was that any of the oil that had got out of the Strait of Hormuz las week had turned up at a refinery by now. "What we've actually got is a pause. The oil is now cut off. There's a lag time, so the price of oil has jumped up, the price of our fuel has come down.

"At the beginning of this week I told somebody 'put it off til next week to buy your gas' and until today I thought it would come down."

Collins said another aspect to consider were company margins.

"As the fuel prices were going up, we saw record prices, but we also saw record low company margins. And so what's happened is the prices come down, the margins have gone back up to balance that price a bit. And we saw some fairly high margins last week and the other week before, then they came down last week, and they're coming down this week.

"But who knows what's going to quite happen as a consequence of it, because there's still this disjoint… the price of oil is not a good indicator anymore of the price of fuel that we're getting. So it's very hard to predict… if I can get it below $3 a litre right now, I'd be out buying it."

He said some areas with multiple stations around one offering a discount might match it.

Collins said he expected prices to increase again.

"We haven't got a supply problem. We've got a price problem. Because we're rich enough to be able to afford to buy the stuff, we won't have a shortage like the likes of Philippines or other ones that literally are poorer countries and can't afford it."

Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make, spend and invest money