New Zealand LPG Gas Pricing Explained
World LPG Benchmark Pricing
New Zealand LPG prices reflect the fact that LPG is an internationally traded commodity and influenced by international prices.
The international benchmark for the cost of New Zealand LPG is the Saudi Aramco Contract Price, also commonly called the Saudi CP.
The Saudi CP changes on a monthly basis, forcing price reviews at least once per month.
All internationally traded commodities are subject to price fluctuations.
Agricultural and natural resource products are similar to LPG, in that they are subject to the prevailing price in international commodity markets.
New Zealand does not have an influence on LPG price benchmarks, as our production of LPG is small compared to worldwide production.
The same is true for the New Zealand pricing of crude oil and refined products, which are also linked to international prices.
The Saudi CP is expressed in US dollars per tonne.
As the international price for LPG is in US dollars, the New Zealand dollar exchange rate also affects the New Zealand price of LPG.
Exchange rates change numerous times per day, making the setting and publishing of prices even more challenging.
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LPG Transportation Costs
There are many locaties in New Zealand, from small towns and villages to large cities.
All of these localities are different distances from their closest delivery depots which, in turn, are different distances from their supply terminals.
Each has a specific cost of delivery and this complexity is one of the reasons why it is difficult to publish pricing for all areas.
For example, if you live 1km from a depot the cost of delivery would be much different than if you lived 50km away.
Transport costs and refinery terminal fees are also a significant part of the overall cost of delivered LPG.
New Zealand LPG is sourced from oil & gas fields, refineries and importers.
As these can vary across the different geographical locations of New Zealand, LPG pricing can also vary by location and distance from the source.
There are three distance related transportation cost variables:
- Distance from original source to the main terminal
- Distance from the main terminal to the various local depots
- Distance from the local depot to your location
The cost of servicing a larger volume account is typically less than a lower volume account.
Delivering larger quantities, on a given delivery, is obviously more economical.
There are also equipment costs, account administration costs and other costs & considerations that, when spread across more volume, will affect the price.
As an example, autogas dealers take thousands of litres per delivery, as compared to cooking only customers who might use just one gas bottle every 15 months.
As a result, the volume used affects the unit pricing.
The seasons can also affect LPG costs, as the worldwide demand is generally higher during the northern hemisphere winter.
In general, higher demand results in tightening of supplies and an increase in prices.
The government affects the price you pay for LPG through the application of taxes.
Geo-Political Issues and Supply Interruptions
Embargos, wars and social unrest in LPG producing countries can adversely affect supply and drive prices upward.
Natural disasters, like earthquakes and fires, can also have an effect.
While Elgas is the largest marketer of LPG in the Tans-Tasman region, we are also dependent on the primary LPG producers for the product and are subject to changes in the international price, taxes, transport and other related costs and considerations.
The variations in world benchmark pricing, exchange rates, transportation and delivery costs, as well as the variations in the volume used, make it impractical to publish pricing for all customers in all New Zealand localities. However, you can contact us and we would be happy to provide you with very competitive pricing applicable to your unique situation.
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