The AA expects chaos at petrol pumps if the government’s tax break on fuel comes to a sudden end in August and suggests the measure either needs to be extended or phased out over a period of time.

Terry Collins, principal adviser for motoring policy, warns New Zealand motorists will be queueing out on to the roads to top up their vehicles if the current 25c cut to fuel excise duties is removed overnight.

His concerns come as the average price of a litre of 91 octane petrol has surpassed the $3 mark and diesel is also increasing sharply, with no end in sight to increasing prices.

The government sought to provide consumers with relief from rising fuel costs in March by slashing fuel excise and road-user charges for three months.

It extended those measures for a further two months in the May budget, meaning August 14 is the earliest the tax cut will be reversed.

Collins, pictured, says drivers will rush to refuel their cars in mid-August if the policy is simply dropped at that time, reports Stuff.

“There would be queues going out onto the road. It will be a big decision for the government to make,” he adds.

“We are thinking they may gradually put it back on instead of having a price shock. I think that would be a prudent thing to do.”

The government says it is monitoring the fuel situation. Officials will also have to consider the cost of prolonging any tax break, which is currently reducing government revenue by about $27m a week.

Collins notes that complaints from AA members about the price of diesel, which has hit $3 a litre at some service stations, are increasing as its cost shifts closer to petrol because of an international shortage.

Source: autofile.co.nz