Fuel price-gouging claims aren’t true or helpful
Thursday, 26 March 2026
Lee Marshall is chief executive of the Motor Trade Association. The MTA represents more than 4000 businesses within the automotive industry, of which nearly 1000 are service stations.
OPINION: Price-gouging at the pump makes for a cheap headline in times of expensive fuel. After all, nobody wants to pay more to get around, and it’s convenient to blame someone.
As it happens, there is someone to blame this time around – but it’s not the person behind the counter in your local service station. Or their manager. Or even the owner. Nothing happening within our borders goes far to explaining the rise in price motorists are experiencing.
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Recent tough talk by Associate Energy Minister Shane Jones and the Commerce Commission would have you thinking otherwise, and added fuel to already smouldering resentment.
Commissioner Bryan Chapple was quoted as saying the commission would “call out” any prices it saw as profiteering – further stating that fuel stations needed to ensure “alignment” of fuel pricing with source costs. Jones added to that by encouraging the public to dob in any suspected price abusers.
Both are well-intended, no doubt. But ask any local operator and they’ll say they actually want low fuel prices, not high ones.
Expensive fuel means people travel less. Less travel means less litres sold. Less litres sold means less margin for service stations, where most operate on wholesale pricing agreements based on a fixed cents per litre margin, not a percentage of the total dollar cost. Whether fuel is $2/litre or $5/litre, their margin doesn’t change (but many of their costs do).
Expensive fuel means less sales in the shops that accompany fuel sites. Ordinarily, they’d make more out of the pie and coffee you buy than the $100 of petrol you also bought.
Then there’s crime and abuse. Unfortunately, some frustrated motorists vent their anger on the person behind the counter. We recently started surveying our 1000 service station members on the effects of rising fuel prices, and reports of abuse have risen sharply. Historically, theft rises too.
Disgruntled motorists would do well to take note of overseas research. British academics at the University of Warwick recently studied petrol price movement in the UK following the Russian invasion of Ukraine.
That situation mirrored the current one, where the US attack on Iran has caused a sharp spike in oil prices, through Iran’s closing of the Strait of Hormuz in retaliation.
What researchers found in the results of their study, published recently in The Conversation, was that as oil prices rose, wholesale petrol prices closely tracked.
But retail prices – what motorists pay – rose more slowly and smoothly. In fact, retailers reduced their margins – in all likelihood to ensure they didn’t lose customers. The very opposite of price-gouging, because it’s squeezing the profits of the business.
Because motorists were seeking the cheapest prices, the competition between outlets actually put downward pressure on prices.
But what about when the oil price fell? It’s a common gripe that service stations are slow to react to falling crude prices. The researchers found that while prices did come down more slowly, over the life cycle of the price rise and fall, motorists ended up paying only one penny more per litre.
“Our findings point to a clear conclusion. Petrol retailers do not appear to profiteer during periods when oil prices are rising rapidly. If anything, their margins tend to be squeezed,” researchers concluded, adding any concerns about excess profits should be on the way down.
In short, while the Commerce Commission and the Government mean well, the research shows profiteering is a falsehood. It’s good they are looking, but they also need to be careful not to feed myths in the public mind.
Service stations owners - many of whom are small business owners - are painfully aware that the current situation is hurting Kiwis.
For your sake, and theirs, they’re doing their best to keep prices down. Fuel markets are complex, and supply and pricing are not simple matters. But don’t let that fool you into thinking the ails of the global oil market are the fault of your local servo.
If prices are high for a while yet, and they’re likely to be, don’t blame the servo. If it makes you feel any better, blame the White House.