Senior policy analyst Mark Stockdale described the market as "quite complicated" which caused a number of consumers to contact the association with queries and concerns.
A lack of knowledge led many people to feel hard done by when it came to the price they were paying for lpg.
However, Mr Stockdale believed there was "nothing untoward going on" as "price reductions are being passed on every month in terms of the contract price".
The contract price appeared to be the main confusion point for consumers as it operated differently from other fuels, such as petrol, when it came to price setting.
In January last year, New Zealand went from operating in a domestic lpg market to the international market in which prices were based on the Saudi Aramco Contract Price.
This price, based on the cost per tonne of propane and butane, the two gases which make up lpg, was set monthly. The price of lpg was set by a contract, when the contract was last signed determined the price.
"The lpg market has changed and the pricing mechanism has changed from what people are used to," Mr Stockdale said.
The price of lpg was historically very low because it was supplied domestically, but now, as those stocks dwindle, more lpg is sourced from Australia.
When a wholesaler purchases lpg it has to be shipped to New Zealand where it will often be stored to be bought by retailers and other wholesalers.
The reason the retail price of lpg did not often reflect international prices, was because lpg often took a long time to shift, Mr Stockdale said. Depending on demand, service stations might not be able to adjust pump prices until they restocked at a later month, he said.
The price consumers paid continued to be based on the price which was originally paid for the stock, regardless of the current market price, until it was replenished at a different contract price.
While auto lpg consumers were not currently benefiting from how the market operated, they did last year, Mr Stockdale said.
Last year, when petrol prices were at their peak, lpg prices were comparatively low. In June, petrol was $2.11 per litre while auto lpg was $1.30 per litre.
"It's swings and roundabouts."
The price of lpg rose when demand for it grew. Overseas, many homes were heated by diesel generators and when the price for diesel increased, many switched to lpg as an energy source.
"The demand for energy exceeded supply."
Now, as prices for petrol and diesel have come down, lpg prices would follow, he said.
Consumers were encouraged to shop around in their local area to obtain the cheapest price, as different suppliers might offer different prices, Mr Stockdale said.
The AA also wanted service stations to advertise the price of lpg on their main signboards, as was done for petrol and diesel.
Rockgas supplied about 300 service stations in New Zealand and several factors affected pricing, spokeswoman Louise Griffin said. These included international exchange rates, freight costs as well as onshore costs and onshore delivery costs.
She described the market as being "quite volatile over the past months".
Over the past year, the company had not increased prices, which meant it did not have "much room to bring it back" now.
The company set recommended retail prices for its auto product only, leaving retailers to set domestic prices. In Dunedin it was $1.18 per litre.
Pricing was different for domestic and auto lpg, as the former was sold by the kilogram and the latter by the litre.
Rockgas had no objections to service stations displaying lpg prices on the main board and believed many stations which had space already did.
Chevron New Zealand, marketer of Caltex, was supplied by Rockgas, spokeswoman Sharon Buckland said.
She believed it was "unlikely" the price of lpg would be advertised on station's main pricing boards because lpg was not a main product for them. She compared advertising the price of it on the main board with doing the same for milk.
BP purchased gas at a wholesale price from Ongas. It recommended retail prices for company-owned stations while independent stations set their own pricing, spokeswoman Diana Stretch said.
She described the AA's call to put lpg prices on the main board as "problematic". "You can't magically make more space appear," she said and questioned what would be taken off to make room.
"We display the most popular products," she said and lpg prices were available to customers before they filled up.
Shell purchased gas from supplier BOC and retailers then set the prices on recommended pricing from head office, spokeswoman Jackie Maitland said.
Retailers took into account local demand and market volumes when setting prices.
"Anything we buy on the international market is determined by the strength of the kiwi," she said.
Shell too would not be making moves to advertise lpg prices on their main boards.
"We want to provide as much information to our customers as we can, in this case the majority of our customers are buying petrol and diesel."
No-one was unavailable for comment at Mobil yesterday.
LPG facts:
• More than 40,000 New Zealand homes use lpg.
• More than 10,000 motorists in New Zealand use lpg in their vehicles.
• It is primarily used for heating, water heating and cooking, in homes and businesses. Its use in these applications now displaces about 1945GWh of electricity generation a year, which makes lpg an increasingly valuable energy asset.
• It is used as a process fuel in industrial applications where it displaces less environmentally-friendly fuels like coal and fuel oil, and as a cleaner-burning vehicle fuel. It also powers the traditional barbecue and provides a heating and cooking source in boats and caravans.
Source: New Zealand Lpg Association
