Government points to rising margins as petrol closes in on $2.50 in main centres

Friday, 5 October 2018

Strategies to spend less on petrol require effort.

Another round of petrol price increases has motorists paying almost $2.50 in main centres, prompting calls for the Government to signal how it could intervene in the market.

Overnight on Thursday the major petrol companies added 4c a litre to petrol, taking 91 octane or 'regular' petrol to $2.489 in many parts of the country.

In Auckland, where the Government has introduced a regional fuel tax, at least two stations are charging $2.499 a litre, according to crowd sourced price monitoring company Gaspy.

Some more remote areas are paying more, with motorists on Waiheke Island paying more than $2.70 a litre, while Caltex Wanaka in Central Otago is currently charging $2.639, according to Gaspy.

**READ MORE:

A BP station near the Basin Reserve in Wellington, charging $2.489 on Friday morning, after the major petrol companies raised prices by 4c a litre overnight.

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Motorists have faced a sharp series of hikes in recent months. In May, prices in many parts of New Zealand hit $2.30 for the first time.

In the past week prices are up 8c, with a nationwide increase in excise tax adding 4c a litre on Sunday.

The Government is passing legislation to enable the Commerce Commission to conduct market studies, which could prompt the competition watchdog to undertake a thorough investigation into whether the petrol market in New Zealand is competitive.

In the mean time, the Ministry of Business, Innovation and Employment (MBIE) is set to begin publishing new reports highlighting what makes up the price of petrol.

Although the figures are not new, the figures highlight the degree to which the margins on petrol have climbed since 2008. The publication of reports to be titled 'spotlight on fuel' appears to be another attempt to add public pressure to the petrol companies, with the Government previously describing the market as 'broken'.

In a statement, Energy Minister Megan Woods said the Government had been monitoring the market closely, but MBIE's efforts had been frustrated because some companies had refused to provide the necessary data to comprehensively review the market.

'What MBIE did find was that the rise in margins since 2008 represented a transfer of wealth from the pockets of consumers to the producers to the tune of hundreds of millions of dollars a year and that the evidence suggested Kiwis were paying over the odds for their petrol – especially in Wellington and the South Island. That's very concerning,' Woods said.

Figures provided by MBIE suggest the margins to fuel companies have more than doubled since 2008, although in January were still below where they were in January 2015.

Other figures available on the MBIE website suggest petrol margins are now at the highest level in more than a year, a level which prompted former Energy Minister Judith Collins to write to the companies seeking an explanation.

AA spokesman Mark Stockdale said the publication of MBIE figures may do little to add pressure on the petrol companies, given the high level of debate around petrol already this year.

'Publishing some slightly more informative reports on data that is already available…I don't see how that's going to put more pressure on the fuel companies that isn't already out there as a result of the high level of public interest and media that surrounds this topic.'

Stockdale said because of the time taken to pass legislation and then conduct any market study, it was likely to be well over a year before the Government would be in a position to say with clarity that the market had competition problems. In the meantime, he said, the Government could signal what it might do to intervene in the market to try to reduce prices for motorists.

'They could signal that and that might prompt the industry to preempt any interference in the market by actually trying to head that off at the pass.'