The price at the pump is expected to deteriorate after the reduction in oil production

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The pain at the pump is expected to worsen in the coming months as oil companies pass on price increases stemming from a cut in global oil production and sanctions against Russian marine tankers.

By Amy Williams of rnz.co.nz

This is bad news for households already burdened by the high cost of living and rising interest rates.

Those filling up at a petrol station in the Auckland suburb of Mt Albert know that every liter counts.

Alma Urbiztondo said her household had noticed an increase in prices on the shelves and at the pump.

“We sold one of our cars, for the moment the family only has this car. My sister has chosen to take public transport to cut a certain part of the budget.”

George Baker said he spends $150 a week to fill up his car with gas and any price increase will cut into his budget.

“I’m probably going to have to cut stuff out of my budget because I have to get to work, that’s how I make my money.”

Jennifer Martin said she would have less money for discretionary spending if gas prices go up.

“I would still drive to work but I wouldn’t drive to my family, a group of parents takes 45 minutes that way and another 45 minutes that way so we would drive to them a lot less.”

The organization of the petroleum exporting countries, OPEC, will cut oil production by two million barrels a day, or 2% of global demand – its biggest cuts since the start of the pandemic.

Given that oil production fell short of its target, analysts believe the real reduction will likely be less.

Gull chief executive Dave Bodger said any shortages would be felt at the pumps.

“The price of the product we buy will go up and yes, unfortunately we will have to pass that on to the motorist. We will do our best not to, but in the end there is not much you can do,” he said. -he declares. said.

“When the cost of fuel goes up, yes, we see a decrease, but I feel like people aren’t going to the movies as much.”

AA’s top policy adviser, Terry Collins, said there were other headwinds hammering the price of gasoline.

“Over the next few months it could be a bit disastrous. In December they are going to sanction maritime shipments of oil out of Russia. price. “

The excise duty on fuel is due to be reinstated at the end of January, when 25 cents per liter will be added to the cost.

“All of those factors could see us at those very high prices that we’ve seen at those very high prices that we’ve seen in parts of this year.”

Collins said steep fuel price increases were only having minor impacts on people’s driving habits – but that could change.

“I would suggest that if you don’t have to use the car in good weather for those short trips, don’t use it. Either way the car won’t reach its optimum operating temperature, it will use more gas and it’s probably fine to go for a walk and leave the car in the garage.”

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