If you've got a fuel card, you know how important the price of petrol can be on your overall operating costs for your small business. As a major petrol importer, New Zealand is heavily affected by the world beyond our borders – particularly when it takes the form of crude oil price drops.
A failure to launch
The main story behind these recent oil price drops is the fact that the major oil producing and refining countries were unable to reach an agreement to limit production at the most recent Organisation of the Petroleum Exporting Countries (OPEC) meeting. Iran, which has only recently had Western sanctions lifted, refused to tone down their oil production, concluding in a dissatisfying result for the oil companies attempting to limit the damage on worldwide oil prices that would result from oversupply.
Meanwhile, during these talks, oil workers in Kuwait went on strike, protesting against a proposed wage and benefits cut. This resulted in the country's oil production dropping by more than half, though it has been reported by Kuwait oil ministry spokesperson Sheikh Talal al-Khaled that exports have not been affected as yet. While this does mean there could be a drop in supply further down the line, for the moment it appears that the increase in production and sudden influx of oil from Iran could heavily impact the price of crude worldwide.
What this means for New Zealand
New Zealand imports about half of its fuel from overseas.
New Zealand imports about half of its fuel from other countries, according to the AA, including the Middle East. While Aotearoa does have a single refinery, we still get petrol from overseas in order to supplement local production. As a result, what this recent OPEC failure means for the average Kiwi is that we're likely to see petrol prices drop even further than they already have.
While the price of crude oil in New Zealand does not always directly impact the price at the pump as much as taxes and the like do, they do still have an effect. We have already seen this in the form of the recent drop in airfares and petrol costs. Statistics New Zealand describes how the March quarter saw petrol prices drop by a huge 7.7 per cent. Kiwis are getting an incredible deal on their fuel at the moment, even if they aren't doubling down on the savings from a fuel card.
For more information on how you can get more for your money with a fuel card, get in touch with the team at Card Smart now!