Petrol and diesel prices should be slashed a further 5c-10c per litre, even though fuel prices are at almost five-year lows not seen since May 2010, the Automobile Association says.
Since October, prompted by the 45% plunge in global crude oil prices, New Zealand petrol prices have dropped 49c per litre and diesel by 45c - with seven pump price cuts in the first 16 days of the new year alone.
Automobile Association petrol-watch spokesman Mark Stockdale believes prices should be slashed a further 5c per litre ''at least''.
It was not only the declining cost of global oil prices, but the extent of the suppliers' gross margin; the overhead costs of running a petrol chain, which during the past five years had doubled from about 20c per litre, to 30c two years ago and now stood at 40c per litre.
''The overheads are large ... but we're suspicious that gross margins have gone up 10c during the past two years,'' he said when contacted yesterday.
Mr Stockdale acknowledged large costs had to come from the gross margin, for shipping, terminal storage, transport, the service station network, upgrades, wages and inflation.
He said listed Z Energy's financial accounts, as opposed to other fuel companies whose margins are not disclosed, showed after costs the net profit per litre was 4.2c for Z Energy.
Further cuts of between 5c and 10c per litre were merited, he said.
While 49c had been slashed off petrol prices, Mr Stockdale said by AA's calculations, the commodity price decline represented 52c per litre, meaning more cuts could be passed on.
He was concerned large upgrades to the Marsden Point refinery in the North Island, owned by the big four fuel suppliers and delivering about 50% of the country's fuel, was getting ''cross subsidisation'' from the shareholders, via gross margins and profit.
He said Marsden Pt had proved to be profitable in the past and was a stand-alone investment and operations should be kept separate.
He said even if oil fell to $US1/barrel, New Zealanders would still pay about $1.30 a litre for petrol, because taxes and margins are so high fuel companies could still afford to cut pump prices by 5c a litre.
