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Liam Dann: NZ Herald business editor at large on petrol prices being expected to drop · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk sed B.
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  Speaker 2: Good News on the Way for motorists, which, let's face it,
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  Speaker 2: that's most of us, especially if you're listening driving home
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  Speaker 2: right now. Our petrol prices are expected to fall in
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  Speaker 2: the coming days as oil slumps and the key WE
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  Speaker 2: dollar stabilizes. Liam Dan's, the Herald's business editor at largely
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  Speaker 2: good evening, Good day, Ryan, some good news for a
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  Speaker 2: change for us.
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  Speaker 3: Yeah, and I like to write these things in a
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  Speaker 3: way that makes it clear that they really should be falling,
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  Speaker 3: and we should expect to see them fall the next
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  Speaker 3: few days. So let's hope they do. It's a combination
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  Speaker 3: of well, the main thing is that so the oil
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  Speaker 3: prices fall into the lowest in three years, which is
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  Speaker 3: quite a big slump in the past few weeks. Actually
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  Speaker 3: you might not know that. Notice that at the pump
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  Speaker 3: as much. You know, so our dollar has come off
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  Speaker 3: a lot in the past say six weeks or eight
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  Speaker 3: weeks or so, and that that you know, oil has
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  Speaker 3: traded in US dollars, So that affects the input price
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  Speaker 3: for New Zealand. And that's part of the equation. But yeah,
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  Speaker 3: with that, you know, Brent crude slumping below US seventy
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  Speaker 3: dollars a barrel, you would, and then a dollar is
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  Speaker 3: actually stabilized and gone up a little bit in the
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  Speaker 3: past few days. It really should equate to some lower prices,
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  Speaker 3: I would hope.
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  Speaker 2: Well, I've got I've sold this to everyone.
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  Speaker 3: Yeah, yeah, well that's right. Well, we are dependent on
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  Speaker 3: these big petrol companies that you know, they look, they
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  Speaker 3: tell us they pass it on pretty pretty well, and
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  Speaker 3: Commerce Commission probably believes them.
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  Speaker 2: So we've got a couple of things at play, right.
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  Speaker 2: You mentioned we've got the exchange rate that's stabilizing, but
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  Speaker 2: then we've also got a boost in production from opet
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  Speaker 2: countries and at the same time we've got growth not
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  Speaker 2: being that great.
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  Speaker 3: Yeah. So so, I mean Donald Trump came in promising
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  Speaker 3: to bring down the price of oil. This isn't quite
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  Speaker 3: the reasons that he would have wanted, but one of
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  Speaker 3: the reasons is that when global growth looks like it's
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  Speaker 3: going in the wrong direction, traders tend to sell off
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  Speaker 3: oil because we're just not going to If the economy
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  Speaker 3: isn't as big, there isn't as much action in the economy,
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  Speaker 3: you're not going to see as much use of petrol
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  Speaker 3: basically motor you know, And so that's that's happened. And
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  Speaker 3: so the tariff thing is weighing on the global growth story,
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  Speaker 3: and so the investors are looking forward and going, well,
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  Speaker 3: they're not seeing so much oil consumption or fuel consumption.
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  Speaker 3: And then OPEK, who is the organization that's sort of
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  Speaker 3: dominated by the Saudia's Opek, plus it's got Russia in it.
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  Speaker 3: They have after a couple of years of cutting back
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  Speaker 3: on production. Have this is sourced from Reuters, but that
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  Speaker 3: Reuters says has got They've got three sources saying that
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  Speaker 3: OPEK currently plans to boost production. So that means more
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  Speaker 3: supply coming on less demand. And so the oil price
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  Speaker 3: is slumped in the past few days. So some of
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  Speaker 3: those reasons are not fantastic if you're thinking about global
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  Speaker 3: growth and the fact that we want our exports booming
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  Speaker 3: and helping the recovery in New Zealand. But you know,
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  Speaker 3: from an inflationary point of view, this is the thing
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  Speaker 3: about economics, upsides and downsides. From inflationary point of view,
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  Speaker 3: that's quite good. It means that less pressure on domestic
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  Speaker 3: inflation and obviously just quite good if you kind of
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  Speaker 3: fill up for the weekend and going somewhere.
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  Speaker 2: Certainly, it's interesting because that monetary policy statement we had
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  Speaker 2: through from the Reserve Bank, the most recent one, and
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  Speaker 2: there they listed as one of the risks our exchange
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  Speaker 2: rate to inflation, our exchange rate plus the potential for
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  Speaker 2: you know, all of this stuff to happen overseas and
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  Speaker 2: petrol prices to go up, and we would be doubly
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  Speaker 2: kind of hat.
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  Speaker 3: I guess they've got to look at that risk that
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  Speaker 3: that was. I guess the dollar had been coming off
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  Speaker 3: a lot at that point. It does seem to have stabilized.
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  Speaker 3: The markets have turned a little bit against the US dollar,
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  Speaker 3: and we've seen US bonds coming off a bit because
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  Speaker 3: you know, they're genuinely concerned about what happens to what
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  Speaker 3: Trump is called a bit of disturbance the economy. There
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  Speaker 3: are around tariffs, and so that's the sort of a
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  Speaker 3: headwind to US growth. And the US dollar has come
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  Speaker 3: off a bit, especially against the European currency, but that's
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  Speaker 3: benefited the New Zealand currency a bit. Look, miss Wilburin,
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  Speaker 3: right now, who's to say how long anything is going
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  Speaker 3: to last, it could be the other way around by
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  Speaker 3: the time I'm talking to.
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  Speaker 2: You no exactly, which is what makes it so difficult
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  Speaker 2: if you're a business like the automakers. Thank goodness they've
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  Speaker 2: been given thirty day reprieve. But I was listening to
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  Speaker 2: an exec from an automotive company in the US saying,
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  Speaker 2: how do you plan when you know you're purchasing your stock,
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  Speaker 2: your labor. When are these tariffs going to be here
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  Speaker 2: for one year, two year, three year, two minutes.
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  Speaker 3: It's a huge amount of uncertainty. I mean, New Zealand's
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  Speaker 3: facing it with agricultural exports. At the moment, I think
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  Speaker 3: New Zealand's lucky. It's got great free trade agreements and
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  Speaker 3: alternative markets, and there could be some, you know, some
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  Speaker 3: strange side effects. You know, if the US is US
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  Speaker 3: beef is getting blocked and China, then it's probably good
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  Speaker 3: for New Zealand. You know, it's very hard to see
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  Speaker 3: how it lands. It is a big strange experiment right now,
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  Speaker 3: and you know, let's hope it lends lends fairly well.
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  Speaker 3: And want you know, New zealand economy is quite flexible
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  Speaker 3: and the dollar is a sort of a safety valve.
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  Speaker 3: The fact that we have a floating dollar and we can.
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  Speaker 3: It's an economy that sort of self corrects around some
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  Speaker 3: of this stuff, so that stuff's positive. If we could
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  Speaker 3: just get a bit of growth going at the at
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  Speaker 3: the ground on the ground floor of the economy, they'll
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  Speaker 3: be all good.
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  Speaker 2: In the meantime. Check gas, everybody, and enjoy Liam Dan
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  Speaker 2: the New Zealand Heralds Business editor at LARTE.
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