Ardern warns BP: The usual explanations just don't exist

Monday, 30 April 2018

Prime Minister Jacinda Ardern says BP has explaining to do, warning the 'usual explanations do not exist' for its pricing strategy.

Speaking at her post-Cabinet media conference, Ardern said motorists were unlikely to see the company's actions as fair.

BP has refused to be interviewed on an internal email which outlined a plan to raise prices in several provincial areas in an attempt to protect sales in another. The email suggested the tactic had worked previously.

'To hear so blatantly that pricing decisions are being made that sit so far outside the price of crude oil, that sit outside the exchange rate, that sit outside, for instance, operating costs, will no doubt be raising eyebrows with consumers,' Ardern said.

**READ MORE: 

* Behind the pricing: Internal email lifts veil on BP's petrol prices

* You're being squeezed on petrol

* [Please explain BP told as asked to attend Beehive

​](https://www.stuff.co.nz/business/103471324/bp-summoned-to-the-beehive-after-internal-email-outlines-alarming-pricing-plan)* Read the BP pricing email in full**

'It's certainly raised eyebrows with our minister.'

Energy Minister Megan Woods confirmed on Sunday that BP had been told she expected them to meet her to explain the strategy.

Ardern warned 'the usual explanations, in this case, just don't exist' but the Government would await to hear BP's side of the story before making a decision about any action.

Earlier, Z Energy, New Zealand's largest petrol retailer, defended the competitiveness of the industry, in the wake of reports about BP's strategy.

Wellington-headquartered Z Energy, which also owns the Caltex brand in New Zealand, pointed to variation in prices across New Zealand as a sign of a functioning market.

'We assert that's a sign of competition, not an absence of competition,' Z Energy's general manager of corporate, Lindis Jones said.

Jones declined to comment directly on the actions of BP, which were reported by Stuff on Monday.

However, he insisted there was strong competition.

'You've got price differences coming and going in all places across New Zealand now, and that's something we think is a sign of competition, not an absence of competition.'

Asked whether all parts of the country were competitive, Jones said the market was competitive in 'many places'.

The AA has claimed that there is a major cross subsidy in New Zealand, with motorists in some areas paying for discounts elsewhere through extra high margins. This includes Wellington and many parts of the South Island.

But Jones said if margins were too high, competition would resolve the issue.

'Where there are extraordinary margins, the best cure for higher margins is higher margins in some respects. You see competition coming in and you see price differences and competition in action,' Jones said.

'We don't see barriers to entry causing that to happen, so we think we've got a functioning market.'

On Monday afternoon, BP issued a statement, but again refused to be interviewed.

'Petrol prices in New Zealand are highly competitive and we adjust our prices in response to local competition, particularly in instances where discounting has become unsustainable, which is what occurred in the lower North Island last year,' the company said in a statement.

'We believe competition on price will remain a key characteristic of the New Zealand fuel market in the coming years. Because the New Zealand fuel market is already highly competitive we actively manage our prices on a daily basis to remain competitive, as well as provide the best possible customer service offering.'