Facts About Fuel

1. What causes fuel prices to rise and fall? 

There are two main reasons - the cost of crude oil and the cost of refined petrol and diesel on the world market.

Crude oil makes up a significant portion of the cost of fuel. Crude oil is traded in US$ as a commodity on the international market. The market is influenced by a number of factors including global demand, supply, political events and manufacturing capability.

Refineries purchase crude oil on the international market to make it into petrol and diesel. Refined product is also traded on the international market and has its own pricing.

Normally, this market for refined fuel has the biggest influence on what BP pays for fuel. As with crude oil the market moves according to global supply and demand. When the price of refined fuel rises, BP pays more. And when it drops, we pay less.

In summary, a combination of the cost of crude oil and refined products are a significant factor in determining what it costs you to fill your car.

The next most influential factor on the price at the pump is the US/NZ exchange rate, as oil and refined products are sold in US Dollars.

As we have to import almost all of our crude oil, the cost of international shipping also has an effect on the price at the pump.

2. Emissions Trading Scheme - what does it mean for fuel prices?

From Thursday 1 July, 2010, a carbon component has been added to the price of BP fuel across the country to meet the industry’s requirements under the Emissions Trading Scheme (ETS).

The New Zealand Government implemented the ETS as one of the ways it will meet its Kyoto obligations. Under the Kyoto Protocol, the Government has agreed to limit New Zealand's carbon dioxide (CO2) emissions and the emissions of other "greenhouse gases" into the atmosphere (measured against the CO2 equivalent level).

Under the new law BP NZ, along with other obligated parties in the Liquid Fossil Fuels sector, is required to surrender emissions units (sometimes called carbon credits) to the Government to cover the CO2 equivalent emissions (often referred to as carbon emissions) from products that we import or produce at the refinery.

The level of emissions is calculated using a formula set in Regulations.

Until 31 December 2012 we are only required to surrender one unit for every two tonnes of carbon emissions. We are able to buy the emission units from parties who have them or from the Government, which is offering a fixed price option for carbon credits at NZ$25 per unit. Applying the 1 for 2 surrender obligation, this effectively means NZ$12.50 per tonne of carbon emissions until 31 December 2012.

We have used this amount to determine an initial cent per litre amount for carbon emissions from each product. These cent per litre amounts are outlined in the table below:

Going forward prices will continue to move up and down depending on changes for all the components contributing to the fuel price e.g. product, shipping, exchange rate and carbon emissions.

To calculate the volume of carbon emissions generated by a particular product, go to the calculator below