Petrol prices could hit $2.70 by next year - and the results could be devastating for low-income families.
That's the warning from economist Shamubeel Eaqub, who's advising New Zealand to start planning now.
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The latest fuel tax increase has sent prices soaring yet again with petrol prices up by 3.5 cents per litre. Taxes on petrol are set to continue increasing with national price hikes of three to four cents a litre in each of the next three years.
Appearing on The AM Show on Monday, Mr Eaqub said we should be budgeting for "big increases" for oil prices on top of what we already have.
"We've got two big risks coming up. We've got the New Zealand dollar that's probably going to weaken and we've got all the global conflicts so the price of global oil is probably going to rise," he says.
"We know that when the cost of fuel goes up and when we pile on more and more of these taxes, the impact is inevitably on the lower-income households."
Mr Eaqub said there is a lot of uncertainty, but things are likely to get worse.
"You should be planning for another 10-15 percent at least," he says.
"Plan for another 25 cents, so $2.65, $2.70 by the New Year?" Garner asked.
"By the early part of next year," Mr Eaqub agreed.
"We've got these kinds of pressures coming through that are completely outside of our control, but for people who are on low incomes the big thing is make sure you look at your budgets, understand where your costs are, because it's very hard to take your travel costs out."
The Road Transport Forum CEO Ken Shirley says the impact of rising fuel prices will be seen immediately. They won't just hit motorists in the pocket, they will hurt everyone as they increase the cost of living.
"It'll cost motorists more to go to the supermarket and the goods in the supermarket will be more expensive because all the freight from the road-user charges on the diesel for the trucks to put the goods in the supermarket also has to flow through into prices," Mr Shirley says.
Opposition leader Simon Bridges says the fuel tax increases are "shameful" and he blames the Government.
"We would repeal the regional fuel tax. New Zealanders should get more of their hard-earned money," he told The AM Show on Monday.
"If it's $2.44 as it is at the moment, I won't put new excise taxes on. There's a promise... I can't be clearer. No new taxes under a first-term National Government, if elected the next time, and that includes excise taxes."
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