Automotive price information: 14/08/09

The graph below shows LPG and petrol pricing data over the past five years. Petrol and LPG prices move independently of each other and therefore the difference between the fuels can vary.

Ideally, the decision to use LPG as an automotive fuel should be based on the period over which you plan on operating the car, rather than the difference that exists between LPG and petrol prices on any given day. For data in a table format and to use the LPG savings calculator follow this link

Notes to graph:

1. A = Historical retail 91 grade petrol price. This data is from the Ministry of Economic Development and is available at: http://www.med.govt.nz/templates/Page____38622.aspx
2. B = Historical Fuelcard taxi price (in Wellington) which has been increased by 28.6 per cent over the actual price. The price has been increased because LPG has a lower energy rating than petrol, which means a vehicle will use approximately 28.6 per cent more LPG than petrol to travel the same distance.
3. C = Shaded area showing the difference that exists between petrol and the adjusted Fuelcard taxi price at any point in time. The average difference over the period 23 April 2004 to 14 August 2009 is 43.4 cents per litre (cpl).
• a) C1 25 March 2005 the difference was 39.4 cpl
• b) C2 23 March 2007 the difference was 46.3 cpl
• c) C3 20 March 2009 the difference was 18.5 cpl

Frequently asked price questions

Is the price of LPG linked to the price of petrol?
No. Key factors that influence petrol prices are: the price of crude oil, the price of refined product and the exchange rate. The price of crude oil can fluctuate on a daily basis. Key factors influencing LPG prices are: the international contract price of LPG (CP) and the exchange rate. The LPG CP is set for a month at the start of each month.

If the price of LPG is not linked to the price of petrol, why do they seem to move together?
Internationally, naptha (made from crude oil) or LPG can be used in the manufacture of plastics. Just like a dual fuel car owner in New Zealand could choose to use either petrol or LPG depending on which is cheapest, the international manufacturers of plastics can also choose between naptha (crude oil) or LPG.

This has the effect of causing crude oil and LPG CP prices to move in relation to each other even though they are not directly linked.

Why do LPG prices in New Zealand not move at the same time as petrol prices?
The base costs for LPG and petrol are different. Therefore they move at different times depending on what is happening to the base costs for each fuel. For example, between January 2006 and June 2006 petrol prices rose rapidly but LPG prices did not change.

LPG prices never used to change much, now they just seem to keep going up?
Historically New Zealand produced more LPG than the New Zealand market required and the wholesale price for LPG remained stable due to a number of long-term fixed price contracts that were in place within the industry.

Therefore New Zealand LPG prices bore no relationship to international LPG prices. This meant that when international energy prices rose (including crude oil prices which caused petrol in New Zealand to rise) LPG prices in New Zealand did not rise.

Since 2005 the New Zealand LPG market has required more LPG than New Zealand could produce and the historical fixed price contracts have started to end. This has meant that LPG prices in New Zealand have become exposed to international prices at a time when all energy prices have been rising sharply. This has affected both petrol and LPG prices.

Since mid July 2008, international energy prices have started to fall which has led to retail prices for petrol and LPG falling.

Why is LPG cheaper in Australia than New Zealand?
The international LPG price (CP) determines prices for LPG in Australia as well. There are four reasons that LPG is cheaper in Australia:

1. The freight cost of getting LPG to New Zealand is much higher than the freight cost Australia pays and Australia produces far more LPG than its local market requires.
2. The international LPG price is in US dollars. The Australian dollar is stronger against the US dollar than the New Zealand dollar is.
3. In New Zealand, automotive LPG users pay excise tax to the New Zealand Government. In Australia, there is no excise tax on automotive LPG although an excise tax is being phased into Australia over the next five years.
4. LPG in Australia is also produced by the oil refineries and is often sold into the Australian market at a discounted rate to the international LPG price.

Will LPG prices in New Zealand fall when the Kupe gas field starts delivering product into New Zealand?
This additional LPG may reduce the freight costs, but the price is still likely to be based on international prices.

Will LPG offer a price advantage compared to petrol going forward?
We cannot predict international energy prices. However we think it is likely that LPG will continue to offer savings because:

1. Demand internationally for petrol and diesel, particularly in China and India, is growing faster than demand for LPG
2. International LPG fields are more widely spread than oil fields and are in areas that are less likely to be influenced by local political instability
3. There are a number of LPG fields being developed internationally (including the Kupe field in New Zealand) which may help to keep LPG prices lower than oil prices.

Why do you use more LPG than petrol?
LPG is a lighter fuel than petrol and contains a lower energy content per litre –approximately 30 per cent less. Therefore you should expect to use approximately 30 per cent more LPG than petrol to travel the same distance. Rockgas has tested this relationship on different vehicles and found that the LPG cars have used 28.6 per cent more fuel than equivalent petrol cars.

Why use LPG rather than diesel – they are almost the same price at the pump?
Diesel does not contain any excise tax at the pump. The excise tax for diesel is called Road User Charges (RUCs) and is paid for separately. Converting the RUC into a per litre cost will vary depending on the fuel usage per kilometre driven for each diesel vehicle, but for passenger cars is likely to be between 40 and 60 cents per litre equivalent. Therefore the actual fuel cost (including RUC as an excise tax) for diesel vehicles is likely to be 40 to 60 cents per litre more than the diesel pump price shown.

I may as well run on petrol rather than LPG as it costs the same?
This will depend on your usage and fuel purchase price options. If you travel small distances (less than 15,000 kilometres per annum) and therefore do not use much fuel AND pay pump price for LPG, the running costs at the moment will be similar. If you can access supermarket discount vouchers petrol may even work out to be cheaper. If you have a Rockgas Fuelcard the LPG price will be lower than the retail LPG price and will improve the economy of LPG. For a high mileage vehicle, using the Rockgas Fuelcard, LPG is likely to be cheaper than petrol. Use our calculator (click here) to work out the best option for your particular circumstances.

What about the fuel’s impact on the environment?
There are some important differences in the environmental impacts of the various fuels:

1. LPG and diesel both produce significantly less greenhouse gases than petrol, approximately 10 to 20 per cent less.
2. LPG produces 20 per cent fewer nitrous oxides and other ozone-forming gases and up to 80 per cent less emissions of air toxics like benzene and formaldehyde than petrol or diesel.
3. LPG contains far less particulate matter than diesel.

While LPG and diesel are roughly equal when it comes to greenhouse gases, LPG is considerably cleaner than petrol or diesel when it comes to the emissions that impact on human health. Benzene is classified as a human carcinogen and is associated with an increased incidence of human leukaemia and adverse foetal development in animals¹. Particluate matter (PM₁₀) affects our health especially if we are asthmatic or have heart or lung disease. PM₁₀ can contribute towards heart attacks, strokes, respiratory diseases and can reduce lung function leading to premature deaths, hospitalisation, increased medication, and days off work or school. PM₁₀ can also carry carcinogenic materials into the lungs. Diesel particulate matter is the most toxic. PM₁₀ can affect visibility by creating a haze over large areas, and can contribute to soiling and corrosion of buildings².

¹ United States Environmental Protection Agency: http://www.epa.gov/ttn/atw/hlthef/benzene.html and sourced from Auckland Regional Council air facts 2
² Auckland Regional Council air facts 2