Petrol market may not be competitive

Petrol price discrepancies around the country may be caused by anti-competitive behaviour, according to a new study. File photo.

A study into New Zealand's retail fuel market confirms it has features which may not be consistent with a workably competitive market.

Energy and Resources Minister Judith Collins commissioned the study earlier this year, to examine issues around petrol prices.

The study found retail fuel margins have increased significantly over the last five years, while fuel margins for aviation and commercial road users have been flat or falling.

It also found that higher petrol prices in the South Island and Wellington are not explained by higher costs in those areas.

“There were difficulties in comparing the information received from the companies, and some very specific information that was required could not be obtained,” says Judith.

“As a result, the study doesn't definitively answer whether fuel prices are reasonable or not. However, the report does conclude that ‘we cannot definitely say that fuel prices in New Zealand are reasonable, but we have reason to believe that they might not be.'

“This is a very complex area and the study takes us a significant step forward in our understanding. I have now instructed my officials to assess the recommendations of the study and report back to me by November.

“Furthermore, the market studies powers announced recently by the Minister of Commerce and Consumer Affairs will give the government the option to direct the Commerce Commission to undertake a further competition-specific fuel market study, backed by the ability to require comparable data across companies. There is currently no legal mechanism to do this.”

She thanks Z Energy, BP, Mobil and Gull for taking part in the study.

The Fuel Market Financial Performance Study, MBIE summary of the study, and the Cabinet paper are available here.



13 Comments

@Waiknot

Posted on 07-07-2017 08:15 | By Papamoaner

Interesting comment but highly anecdotal

Years ago

Posted on 06-07-2017 18:54 | By waiknot

A friend worked for one of the major oil companies. Apparently they had a calendar recording who was first to alter fuel prices. Apparently it was very handy to work out who's turn it was.

Right again

Posted on 06-07-2017 17:55 | By Minib

It's good to see papa has put everyone right on petrol prices his ability to be an expert on all matters astounds me.He should be down in Wellington helping the Government sort things out.

@Maildrop

Posted on 06-07-2017 13:38 | By Papamoaner

If competition was viable it would have been active here for quite some time. Ongoing due diligence will be deflecting initiatives elsewhere. Air NZ is quite buoyant these days, albeit with some volatility here and there. That's not off the internet by the way, so might not be quite current. However, I expect the margin of error is small.

Pap pork

Posted on 05-07-2017 20:23 | By maildrop

Good to see you've discovered cost isn't the driver of price. Thank god for Google. Just like fuel, where we have learned that the prices we are paying are not driven by the cost of importing it, the fares your precious airline is charging Tauranga folk is not based on cost. It's based, and relies on two main factors - no competition, therefore no choice, and gullible fools who happily cough up because of the name. Tauranga is big enough, and has enough demand, for competition. When it comes you will be happy to see the price come down, even though you think fares are based on "cost". Evidently you have no idea how business works. Happy flying.

91

Posted on 05-07-2017 17:58 | By Capt_Kaveman

should be below $1.59

Pap pork

Posted on 05-07-2017 17:58 | By maildrop

An expert on airline cost structures now. Wow, the list grows. I wonder why they can fly Auckland to Queenstown, or even Australia, for a fraction of what they charge people flying in and out of Tauranga. I'll tell you why, because Tauranga is overpriced to allow them to compete with the competition in Auckland. Any idiot should know this but happy to explain it to you. My guess is they could charge you whatever they like because of your blind patriotism. More fool you.

Gull

Posted on 05-07-2017 17:54 | By Papamoaner

A lot of mention of Gull on here. It certainly seems cheaper all around the north island, but maybe dearer in the long run because their 98 is a lower grade fuel with ethanol added to boost the octane rating. Not advisable for use in some engines, eg GDI. Sometimes it's the old story - you get what you pay for. I also prefer BP Ultimate diesel because it has a very low sulphur content around 6ppm. The regulatory maximum is 10ppm from memory, so I'd rather pay a bit extra at the bowser now, than have expensive dpf problems down the track. Like most other commodities and services, there are a bunch of variables to consider when we start debating prices.

@maildrop

Posted on 05-07-2017 12:54 | By Papamoaner

You evidently have little appreciation of the cost of operating an aircraft service, nor the cost/passenger densities involved with smaller places like Tauranga. I use Air NZ a fair bit and have no complaints. Try www.grabaseat.

Not Good

Posted on 05-07-2017 10:36 | By thebrad

All the Petrol companies should be fined, this is against the law.

Confusing

Posted on 05-07-2017 09:58 | By waiknot

At least in TGA you can go to Gull and the price you pay is as advertised. All the rest you get a discount if you whatever you do today. And it's not a discount it's all built in. As for 95 and 98 grade......

Why

Posted on 05-07-2017 08:38 | By Me n U

Why can other Stations compete with Gull and not go out of business yet in town can charge 11 plus cents more .Bethlehem about 11 cents cheaper yet 2-3 kilometres away .What a wishy washy report.It may or may not be but maybe not reasonable and another inquiry may be needed.They would have been paid for a non result.This is a JOKE.Another inquiry commissioned by the Government that will probably go under the carpet.

what about

Posted on 05-07-2017 07:39 | By maildrop

domestic air travel?? I get ripped off every time I leave Tauranga. Oh yeh, that's right its Air NZ so its ok. Obstacles are put in place to prevent competition by the government, to protect it's own company and exploit it's people. Stalin would be proud.

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