Petrol back above $2 a litre as pricing inquiry fades into the past

Tuesday, 29 August 2017

The price board at the Z Energy station on Whitmore St in central Wellington. Petrol prices in the capital and many other parts of the country are back above $2 a litre.

Petrol prices are back over $2 a litre in much of the country, prompting claims margins are rising as the memory of a price inquiry fades.

BP has confirmed the latest increase at its company-owned sites, while Z Energy and Caltex stations in areas without regional discounting have also raised prices.

A 3c a litre increase in the so-called national price on Tuesday marked the fifth increase during August. Regular, 91 octane petrol now costs $2.019 in areas covered by the price.

In petrol industry terms, the 'national' or 'main port' price tends to reflect the price in Wellington and most of the South Island.

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Petrol prices across much of the upper North Island tend to be lower, which commentators tend to blame on the fact that Australian discounter Gull operates in areas from Levin and Masterton north.

The price of regular petrol is now at the highest level since the start of June, when prices dropped sharply over a series of weeks.

AA petrolwatch spokesman Mark Stockdale said while the cost of fuel paid by the major companies would have risen recently, the increases were out of proportion with the cost increases faced.

'There's been some upwards movement in the commodity price, but not enough to explain the increases in the retail price,' Stockdale said.

'It looks to us, very clearly, like the fuel companies are raising margins after the surprising drop in June.'

A spokesman for Z Energy said in just over a week, refined fuel prices have increased by approximately $5 per barrel, and the exchange rate against the US dollar had weakened 'so there is some upward pressure on prices'.

During winter petrol companies were accused of slashing petrol prices in the weeks leading up to the release of a Government ordered report into New Zealand's fuel pricing.

According to figures compiled by the AA, between May 26 and June 22, the price of petrol dropped 19c a litre, a drop of around 10 per cent.

While this partly reflected weaker international fuel prices and a stronger New Zealand dollar, it was 'not enough to justify what turned out to be a very substantial drop in retail prices,' Stockdale said.

'It was almost as if [the petrol companies] would be able to point to the report and say it was wrong because it would say margins were this high, when that's clearly not the case when you look at the current retail price.'

The report was ordered by Energy Minister Judith Collins on the back of concern about rising petrol prices and increasing differences between different regions.

While the report, released at the start of July, didn't say for sure whether fuel prices were reasonable or not, it authors said 'we have reason to believe that they might not be'.

Price increases in Wellington and the South Island had increased far more than in other parts of the country, the report said.

Sources in the petrol industry deny the drop in June was linked to the report, and coincided with a drop in discounting, meaning the often stark gaps in prices between different towns narrowed sharply, albeit briefly.

The drop in June saw the importer margin on fuel, as measured by the Ministry of Business, Innovation and Employment, fall to the lowest level in more than two years.

However by August 18, the most recent figures available, margins on petrol had recovered by more than 5c a litre, even before the two most recent price increases.