'Put the price of fuel up' - raising taxes could lock in transport habit changes

Raising fuel taxes as petrol prices start to fall could lock in the changes to transport habits kick-started by the fuel crisis, some say.

One transport urban planning researcher says the gains in fuel savings and public transport numbers will quickly fall away without any policies to permanently shift people's habits.

Data collated by RNZ shows electric vehicle sales, public transport use and cycling numbers were all still higher than normal in June.

That was despite fuel prices starting to dip below $3 per litre after the Strait of Hormuz re-opened to global shipping in mid-June.

Iran said yesterday it had closed the strait again, after fresh missile and drone exchanges with the US over the weekend.

Auckland Transport data showed the city hit a new June record for bus passenger numbers, with 6.3 million trips taken last month - up 14 percent on last June.

That followed an all-time monthly record set in March, as the annual 'March madness' peak coincided with the beginning of the fuel crisis.

Monthly Auckland cycling numbers have stayed up by about 20 percent on last year since fuel prices spiked.

In Wellington and Christchurch, the other centres with significant bus networks, monthly passenger numbers have been up by two to three percent on the same time last year.

Auckland University urban planning programme director Tim Welch said there had been a corresponding drop in nationwide traffic of 2.4 percent since the beginning of the crisis.

In late March, the Energy Efficiency and Conservation Authority (EECA) launched a $3.5 million campaign encouraging people to save fuel by modifying their driving, including accelerating and braking more smoothly, and lowering their speed slightly.

A return-on-investment report commissioned from consumer research company Verian estimated those behavioural changes saved 6.6 million litres of fuel over seven weeks.

That came at a total saving of $21 million in fuel costs that could be attributed to the campaign, the report said.

Welch said although the changes were heartening, previous research showed they would likely be "extremely short-lived".

"We wouldn't expect them to go beyond a month or two months ... if fuel prices really do drop and stay low," he said.

That was because the government had not introduced any policies to encourage a permanent change to people's behaviour, he said.

Public transport was a good example, he said.

"If fuel starts falling and we haven't done anything with public transport fares... you don't get that benefit of mode-switching anymore."

Permanently reducing public transport fares could have helped, along with encouraging more flexible working-from-home arrangements, he said.

A blunt solution that had worked in many places overseas in the past - including in India, Mexico, Canada and Venezuela - was to increase fuel tax as prices started falling again.

"So the pump price doesn't change. People get used to that higher price, but [the government] starts to get more revenue for it," Welch said.

The extra revenue would help the government to pay for roads and other transport infrastructure, but it would also lock in changes to driving behaviour and public transport use.

Hayden Johnston, the owner of EV specialist dealership GVI, also supported the idea.

"Put the price of fuel up," he said.

He conceded that could be unfair on those who needed to drive a car for work or other reasons, but said there were other options.

"Something we volunteered at the time they were considering the Clean Car Programme was just put the cost of registration up - to register your Commodore V8 costs more than to register your Nissan Leaf."

A new increase in fuel excise tax appears off the cards, though.

Finance Minister Nicola Willis said in April that a 12 cent per litre increase from next January - announced soon after the government was elected - was now "very unlikely".

A growing number of drivers were now avoiding petrol costs altogether.

New vehicle registrations data showed thousands more EVs hitting the road since the advent of higher fuel prices.

But Johnston said sales had been uneven.

After "some of the wildest trading we've ever seen" in April, May sales were "horrendous", he said.

"Everyone who had wanted to purchase an EV had purchased... and then everyone else seemed to sit on their hands and do nothing."

By last month, things had settled into a more regular pattern, with well-informed buyers making up the majority of purchasers rather than the "frenzy" of April.

Seemingly high registration numbers in June likely included a large number of cars that had been pre-sold at the beginning of the fuel crisis but had only just arrived in the country, he said.