PRICE ON PETROL

For starters, let’s look at what the Prime Minister has been saying for the past 12 months — apart from ‘there will be no new taxes’ (insert Tui billboard here: “Yeah, right!”). In October 2018, she said that motorists were being “fleeced” at the petrol pumps. That was presumably on the basis that between October 2017 and September 2018 petrol prices had risen by 39 cents per litre, of which only 6.8 cents could be attributed to taxes and levies. National’s Judith Collins had started an enquiry but that lost traction after the election.

Being someone who can remember filling up my ’39 Ford V8 for around 10 shillings ($1), I can lament the passing of the ‘good old days’. According to the Ministry of Business, Innovation and Employment, the oil-company component of the petrol price — that is, what you get when you subtract the taxes and crude oil price from the discounted price at the pump — started to track upwards from 2010. It reportedly rose to 56 cents per litre in September 2018, from around 30 cents per litre before 2010, when Shell sold its retail stations and a stake in the Marsden Point Oil Refinery to a consortium of Infratil and the Guardians of New Zealand Superannuation. Those stations were then rebranded ‘Z’, which later purchased the Caltex and Challenge brands.

Quick, slow, quick quick, slow

Let’s not forget, either, that when oil prices rose overseas, and/or there was an exchange rate variation, the pump price would invariably rise overnight in many instances — clearly, notification was being emailed to petrol retailers! However, when international prices dropped, that notification apparently came by ship, as it would often take many days, if not weeks, for the reduction to manifest itself at our pumps. Just saying! To complicate matters further, the news media would often quote the West Texas oil-barrel price, when it was Brent Crude that was the relevant information. In a nutshell, the rule of thumb was that for every $1 increase/decrease in a barrel of oil, there was a corresponding 0.01-cent addition or subtraction to the pump price. That was until some oil-company spin doctor decided that it better suited their arguments to quote the ‘refined’ product cost from Singapore, rather than the cost of a barrel of oil. Confused? You’re meant to be!

In more recent times, various loyalty schemes have surfaced, including the Automobile Association’s (AA) BP card. This allows the petrol company to track your petrol usage. While shifting house, I clocked up just under 10,000km and was almost on a first-name basis with the local BP staff. However, shortly after I’d settled in at our new home and stopped filling up every two days, BP started offering quite substantial discounts, so much so that it seemed to me that once I had filled up my vehicles with the six-cents-per-litre discount, I’d get an email offering 10–20 cents per litre! So I opted for Challenge, which happily gave 15 cents per litre on presentation of ‘Winston’s Gold Card’.

The sums don’t add up

Getting back to the topic, I’ve found it extremely difficult to establish exactly how much of the current petrol price is tax of one sort or another — and the media don’t help. For example, a recent front-page story in our main viewspaper entitled Huge Profits Anger Motorists didn’t mention government taxes at all! Why not, I hear you ask? Shouldn’t the heading have been Huge Petrol Taxes Anger Motorists? Even the AA seems reluctant to call it like it is. When discussing the tax component, rather than saying an all-up tax component equates to around $0.92 cents per litre, the AA says, “about 50% is tax”, but the sums don’t add up. So that begs the question: if half the price of a litre of petrol is tax, that means that the balance is a mixture of cost, including refining and shipping, and profit. As far as I can ascertain, shipping and refined product amounts to just under one-third of the pump price, and, assuming that taxes still equate to 50 per cent, I finish up with a balance of around 17 per cent for profit. Is that so bad, really?

The money or the tax?

What about those loyalty schemes? Someone is making huge profits if a recent spam AA/BP email to me was any indication. Apparently, those people who signed up to switch their power provider to Contact Energy have so far saved in excess of $11.5M in fuel costs since the scheme started in April 2017! It was not all it was cracked up to be, as the Commerce Commission took Contact Energy to court earlier this year claiming that customers were being misled about the extent of the discounts available; nevertheless, $11.5M in savings would seem to indicate that BP (in this instance) was making money hand over fist if its supposedly modest margins allowed discounts of that amount! Maybe the viewspaper heading was reflective of motorists’ collective angst about the petrol companies, if a recent publicity stunt is any indication (can’t remember who did it, but motorists entering a petrol station were offered $20 cash or the actual amount of the tax component of their petrol): apparently none of those to who the offer was made opted to take the tax amount; they took the $20, which simply proved that none of them actually knew just how much tax was included in the cost of a litre of petrol. Had they opted for the tax amount, they would arguably have received about $1 a litre!

I accept that some of the petrol tax is for roading projects, those few that the Green Party has not scuttled, but, when the government increases any of the petrol taxes, it double-dips, because, each time, it also gets GST on the increase. In other words, you’re being taxed on the tax! Now that the roading projects that the additional $11.5 billion was earmarked for have been scuttled, who’s really doing the fleecing? It isn’t the farmer next door to me, that’s for sure! No wonder the Prime Minister has been looking a bit sheepish of late!

Just who is actually fleecing motorists?