Petrol prices could be set by Commerce Commission in fuel sector changes
Tuesday, 8 November 2022
A series of new rules has been announced for the fuel industry.
The Commerce Commission has been granted the power to set fair petrol prices if needed.
New Zealand will have to hold onshore fuel supplies to last at least 28 days for petrol, 24 days for jet fuel and 21 days for diesel.
A requirement for biofuels to be added to the fuel supply is being pushed back a year to give the sector more time to prepare and to reduce prices.
Kua tauākītia ētahi ture hōu mō te ahumahi kora.
Kua whakamanahia Te Komihana Tauhokohoko kia whakatau i ngā utunga tōkeke o te kora ina matea ana.
Ka rokiroki a Aotearoa i ngā rawa kora ki konei ake, kia koni atu i te 28 rā o te penehini, kia koni atu i te 24 rā o te kora rererangi, kia koni atu i te 21 rā o te tīhara.
Kua kotahi tau te tārewatanga i te herenga kia āpitihia ngā kora koiora e whai wā ai te rāngai kia takatū ai, kia whakaheke hoki i ngā utu.
New rules giving the Commerce Commission power to step in if fuel prices are too high are on the way, the Government has announced, along with a one-year delay to the addition of biofuels to New Zealanders’ fuel in an attempt to keep prices down.
Energy and Resources Minister Megan Woods on Wednesday also announced new onshore requirements to ensure New Zealand has sufficient fuel stocks in the event of major international oil and fuel market disruption, natural disasters and infrastructure failures.
The Government is ensuring New Zealand has supplies to last for at least 28 days for petrol, 24 days for jet fuel and 21 days for diesel. It will also buy an extra seven days’ worth of cover for diesel to ensure the running of emergency services and food and essential goods deliveries.
**READ MORE:
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* Biofuel mandate runs up against ‘unintended consequences’
* Pain at the pump? It could get much worse
* Fuel firms set to be required to store more petrol in NZ after refinery closes
**
It comes after the Marsden Point oil refinery closure. However, the timeframe of onshore stock is likely to be not be in place until 2024.
“These improvements will pave the way for a more stable, low-emissions fuel supply, greater choices for consumers, and a more competitive wholesale fuel market with the power for the Commerce Commission to regulate prices, if required,” Woods said.
Granting the Commerce Commission power to step in and set fair prices if needed was intended to encourage more competitive wholesale pricing. It would take almost a year for the Commerce Commission’s power to take effect.
“Six to 12 months seems like a long time … it can be imposed and that is what has changed,” Woods said.
“This is a new power. This is something that hasn’t existed and certainly will be a key lever to protect consumers.”
The new backstop measures, expected to be introduced mid-2023, would allow for terminal gate prices of one or more wholesale suppliers to be price regulated if excessive terminal gate prices are found to be offered.
In efforts to reduce any extra potential costs to consumers, the Government pushed the start date out for the Sustainable Biofuels Obligation, which requires fuel wholesalers to deploy biofuels into their fuel supply, from April 1 next year to 2024.
“This is not putting climate change on the back burner,” Woods said.
“It would have ended in consumers’ pockets and that is something we weren’t prepared to do.”
Woods said the international impacts on diesel was the main reason the sector was not ready.
“It’s also reducing any extra potential costs consumers could face; while biofuels will account for a very small part of the overall fuel price, we recognise that motorists don’t need any extra costs in the current cost of living crisis.”
The addition of biofuels was estimated to prevent one million tonnes of emissions over the first two years, going up to nine million tonnes by 2035.
Fuel wholesalers will need to meet emission intensity reduction targets of 2.4% for 2024 and 3.5% for 2025.
National leader Christopher Luxon said he did not want motorists being ripped off.
“By all means, it's important that we have… information disclosure, and we want to monitor pricing actions and competitive activity.
“But really, the government's got to stop blaming a whole bunch of other people other than itself for not having a proper economic plan to deal with inflation.
“With respect to biofuels, big, big fan of biofuels, but obviously by the time we’re putting on mandates and adding costs at this time, it's not going to fly.”
ACT leader David Seymour said the biggest cost that people were facing was the “excise tax that they have to pay… and the income tax that people have to pay on their income before they can even go to the pump”.
“If the Government is worried about high cost of fuel, it should start with the man and the mirror.”
In response to Luxon, Prime Minister Jacinda Ardern said the plan was “squarely focused on supporting people through this period by reducing the cost of fuel at the pump”.
“I note that the Leader of the Opposition keeps calling for a direct response to inflation, yet his only proposal has been one that would be highly inflationary,” she said of Luxon’s tax adjustment proposal.
We're looking for public submissions of between 400 and 800 words to be published in Stuff Nation. To share your tips on saving petrol or changes you’ve made because of prices, email: stuffnation@stuff.co.nz.