Will petrol prices go up? What can and cannot be forecast
Petrol prices are more predictable than most people assume, but only a week or two ahead, and only in a particular way. Here is what is actually knowable.
Why any of it is predictable
New Zealand imports all of its refined fuel, and the price importers pay changes every day on world markets. The price on the pump sign does not. It moves in steps, days or weeks later, once the higher or lower cost has worked its way through. We have set out what makes up the price on the pump sign separately.
That delay is the whole opportunity. When world fuel costs rise sharply on a Monday, some of that rise has usually not reached the pump by Friday. It is still coming. A forecast is really an estimate of how much of an already known cost change has not arrived yet.
This is why nobody can tell you where petrol will be in six months, but a week or two is a fair question. Six months ahead needs you to predict world oil markets, which is guessing. Two weeks ahead mostly needs you to measure what has already happened and work out how much of it is still in the post.
What our forecast watches
Our forecast reads a broad range of data every day: published New Zealand pump prices and importer margins, fuel-sector market shares and supply data, international crude oil prices, Singapore refined petrol and diesel benchmarks, US petrol and diesel futures, the New Zealand dollar exchange rate, fuel taxes and levies, and relevant international and New Zealand news. We also track other market and economic signals that may affect the direction and timing of fuel price movements.
Watching them is the easy half. Knowing that crude oil rose last week is simple. Knowing how much of that rise has already reached the pump, and how much is still on its way, is the whole problem.
What a forecast is actually for
It is not a promise, and a forecast that is right most of the time is still wrong some of the time. What it gives you is a better starting point than guessing.
Most weeks the answer is that it barely matters, and the useful thing a forecast can do is tell you that, so you stop thinking about it. The rest of the time it tells you a real move is coming and roughly how big, which is enough to decide whether to fill today or leave it a few days. We put numbers on how much that is worth in when is the best time to buy petrol.