Why is gas so expensive in New Zealand?

Kiwis are already being hit at the fuel pump by steep price hikes and an expert has now warned that prices could continue to be high for quite some time.

Prices in some areas of the country for unleaded 95 have already passed $3/litre and fuel commentators have indicated that $3/litre for unleaded 91 is also not far off.

Meanwhile, the price of a barrel of oil is now just over US$92 - the highest it has been since 2014.

Waitomo Group managing director Jimmy Ormsby told Newstalk ZB's Tim Dower this morning that the hike in price for a barrel, which has increased by 20 per cent in a month, is reflected at the pump.

"When a barrel goes up a dollar, it [the price] goes up a cent at the pump," said Ormsby.

When asked what the next six months will look like, Ormsby said he was "bullish" that fuel prices would remain high.

A supply and demand issue would have a play in this as well as the closure of the Marsden Point Oil Refinery which was due to a substantial decline in refining margins in the Asia region.

Refining New Zealand announced last year that the site will become an import-only terminal from April and it will be renamed to Channel Infrastructure New Zealand.

On this conversion, Ormsby said the cost of importing refined product that met quality specifications would contribute to fuel prices rising.

"New Zealand has a bit of a quality premium on the product we bring here... we can't just get product from any refinery, we have to get ones that meet the New Zealand regs or refined product that meets our specification," he said.

A change in how the product will be stored and transported around the country and the Sustainable Biofuels Mandate would also impact prices.

"That's all going to be, you know, pushing costs up and I can see that will be reflected at the pump ultimately," said Ormsby.

Other domestic costs were also a factor - the Emissions Trading Scheme levy had doubled from 8c to 16c in the last year, and was also likely to increase further this year.

There are concerns for kiwis' budgets as the price of filling up at the pump climbs.

Automobile Association principal advisor Terry Collins said petrol was not an elastic commodity - when prices rose people did not reduce their fuel use at a similar rate.

"When fuel goes up about 10 per cent, it only has about a 1.5 per cent impact on demand. People just have to travel, and there are many people that just don't have access to good public transport or alternatives.

"If they're on a budget and they're paying for fuel, something else has got to give to make them pay for it."