Finance Minister Grant Robertson is not ruling out fuel tax changes to "help alleviate" pain at the pump as the cost of living soars.
"When we make a decision like that we've got to be aware of the consequences of longer-term issues in terms of how we fund transport," Robertson said on Thursday.
"But it sits among a number of ways in which we can help alleviate the impacts of the increased cost of living and I've mentioned those already."
He said the Government will "continue to monitor the situation".
The Government has been under pressure this week to admit that three-decade-high consumer prices is a "cost of living crisis", with fruit and vegetables up 15 percent annually, rents up 6 percent, and a warning that unleaded petrol could hit $4 per litre.
On top of supply chain issues caused by COVID-19, the United States has now banned Russian oil imports in response to the Ukraine invasion, prompting President Joe Biden to warn that gas prices are likely to keep rising.
Prime Minister Jacinda Ardern on Wednesday said she was "deeply concerned", noting how it would "inevitably have a knock-on effect on energy prices around the world and New Zealand will not be immune to that".
Robertson said he spoke with his finance counterparts from the United States, Britain, Australia and Canada on Thursday morning, who all expressed similar concerns.
"All countries on the call are facing high energy prices in dealing with the impacts of supply chain issues, the invasion and other drivers of inflation," Robertson said.
"Obviously we do want to see increased oil supplies around the world to help the immediate situation but in the long-term moves towards energy independence are vitally important. In the short-term, the Government will continue to support low- and middle-income families to help deal with the impacts of this global energy shock."
The Opposition is calling on the Government to cut taxes, such as Auckland's 10 cents per litre Regional Fuel Tax and the proposed local tax to help pay for the $14 billion Auckland light rail project.
There are also calls for the Government to reduce excise duty, or the tax on petrol. Excise tax makes up 70 cents of every litre, or 80 cents in Auckland.
In June 2018, the Government announced three annual increases of 3.5 cents per litre to petrol tax, with equivalent increases to road user charges. The Government promised no further hikes this term.
The Government is already raking in a hefty amount of tax. The latest update from Treasury shows tax intake was $1.4 billion above forecast at $59.7 billion.
Ireland is planning a 20 cent cut in tax on unleaded petrol, 15 cents on diesel and 2 cents on agricultural diesel until the end of August. Similar pressure is building in the UK and the US.
Robertson said it was "quite clear petrol prices will continue to rise while the impacts of the Russian invasion are felt".
"Obviously it's coming on top of increases we've seen as a result of global supply chain issues and the broader demand issues coming off the back of COVID so this unfortunately is not the end of the road," he said.
"This is a convergence of forces which is causing obvious pain for New Zealanders at the petrol pump."
There are some positive signs, with the United Arab Emirates committing to pumping more oil into the global market to make up for the loss of Russia, the world's top exporter of crude and fuel, accounting for about 7 percent of global supplies.
Despite the mounting pressures, Robertson is still optimistic inflation will fall.
"The forecasts that we're seeing at the moment still see by the end of the year moving into next year that we will see inflation come down. Exactly where the peak is, is what's being debated now."
Treasury predicted in December that inflation would peak in the first quarter of this year but Robertson said he's "seen forecasts from economists that it might be the second quarter now of this year".
"What I have no doubt is that this is a challenging time not only for the global economy or countries but for people because they are facing these increased prices. We're doing our best to support people through that."
But don't expect free public transport to help ease the pain at the pump. Robertson said he was "not making those calls or decisions today."
