Economic Weather report: Petrol price hits 17 mth high, headed for NZ$2/ltr(Update 1)

Watch on our video page here. Watch on YouTube here. Bernard Hickey delivers an economic weather report in association with the BNZ, including a look at how the price of unleaded petrol has blipped up in the last week to NZ$1.75 a litre according to MED figures, its highest point since the week of October 24, 2008. (Updated to include price rise overnight at BP stations to NZ$1.82.5 /litre) A weaker New Zealand dollar and a rise in the price of oil to over US$80 a barrel is to blame for the rise, along with a 4 cents a litre increase in taxes over the last 17 months. Back in October 2008 when the price of petrol was last around NZ$1.75/litre, the New Zealand dollar was trading at 61 US cents, while the price of oil was at US$60 a barrel. Taxes were around 72 cents a litre. Since then, taxes have risen to around 76 cents a litre, the New Zealand dollar has strengthened to around 70 USc and the oil price has risen to over US$80 a barrel. Strong demand out of China and India have helped push up the oil price in recent weeks, along with renewed concerns about peak oil. Meanwhile, the New Zealand dollar has come off its recent highs of over 75 USc and various ACC levies have kicked in. The outlook for the petrol price is for a rise towards NZ$2 a litre by the end of 2010 if current trends persist with oil prices, the currency and taxes. The prospect of a GST hike to 15% in October would, for example, add a further 4 cents a litre. Meanwhile, BP stations increased their price for unleaded petrol overnight to NZ$1.82.5 /litre.