A second price drop within the past week has knocked a total 5c per litre off fuel prices, but the weakening New Zealand dollar is eroding further gains at present.
When fuel prices were highest, at around $2.18 per litre in July 2008, the then high New Zealand dollar was acting as a buffer against the rising prices.
US crude oil prices crashed below $US27 ($NZ41.80) yesterday, on fears the global glut of oil would last longer than expected, Craigs Investment Partners research said.
AA petrol watch spokesman Mark Stockdale said the petrol price drops - 3c on January 19 and 2c on the 15th - meant it was the first time 91 petrol had fallen under $1.80 litre since February 2015.
The diminishing cost of crude has little effect on pump prices, as the cost of refining crude to fuel is almost double the cost of the crude at present.
While the costs of refining fuel were lower today than a year ago, the kiwi had fallen more than 13c in value during the past year, offsetting those lower commodity prices, Mr Stockdale said.
"If the New Zealand dollar was worth the same today as a year ago, the pump price would be about $1.65 a litre,'' he said.
He said petrol prices would never get as low as the pump prices in January 2007, at around $1.38 a litre, "thanks mostly'' to Government petrol taxes having risen 28c per litre since then.
Taxes make up about 50% of the cost of a litre of fuel at present.
Despite the plunging cost of crude oil globally, even if it were sold for $US1 per barrel, taxes meant the pump price would still be around $1.30-$1.35, Mr Stockdale said.
● In Michigan this week, petrol was down to US47c a gallon, or NZ73c, as a price war among petrol stations broke out.
With 3.8 litres to a US gallon, in New Zealand terms, petrol would be below 20c a litre.
The average fuel price around the world this week is US97c a litre or $NZ1.50 a litre.
