Get used to high petrol prices
What’s the difference between Prime Minister Jacinda Ardern and Shane Jones this week? When it comes to using big corporates as punching bags to score political points, not a lot.
And that’s all this week’s brouhaha about petrol and supermarket prices was. Political point scoring.
It’s an old trick many of us learn in the school yard. If you’re in trouble for something, find someone else you can blame for a bigger offence. The old cry of Johnny-punched-first. Or even better, Johnny punched first, and harder, and probably wouldn’t have stopped unless the teacher arrived.
That’s essentially what the PM’s done by accusing petrol retailers of “fleecing” Kiwis.
She pointed the finger elsewhere in the hope of distracting Kiwis from her own Government’s role in the petrol price rise.
It’s a raw flank for the Government. Not only because the Government itself raised the price by a whopping 14 cents in Auckland and 3.5 cents in the rest of the country. And that’s in the space of three months. But also because it reminds motorists of the broken promise. Remember no new taxes?
It’s hard to begrudge Ardern the political play. She’s a politician not Mother Theresa. Countless politicians before her have beaten up on easy-target petrol retailers, and countless after her will do it again.
Realistically, the inquiry into petrol prices could end up doing what every other review has. Nothing.
The Commerce Commission is only acquiring powers to investigate petrol prices, but not to actually do anything about them.
Whether to do anything is a political call that will be made by politicians. And that’s months or years from now, once we’re all used to higher petrol prices. Once we all care much less about it. Get my drift?
If the Government does actually do something about it — not holding my breath — the preferred option seems to be the “Gull effect”. This is effect of the little battler petrol retailer Gull opening up shop, charging less than everyone else, forcing the big boys to drop their prices.
So, Ardern’s talked about helping Gull get into Wellington and the South Island.
Gull can’t do it yet because it doesn’t have big fuel storage facilities in those areas. So the Government can either help Gull financially to build storage, or force the two big petrol companies to sell Gull cheap fuel out of their own storage tanks. Which Gull can then use to undercut those same companies.
How do you think that’s going to go down with the fuel industry?
This bring us to the political risk of regulating petrol retailers.
There are a couple of obvious risks here that could be enough to put any Government off intervening. First, the industry response. And not just the fuel industry, but every industry watching the Government pull the rug out from under another group of business. First oil and gas, now petrol retailers, next supermarkets. It’s not the kind of thing that encourages investment and it’s not the kind of thing that drives up those frustratingly low business confidence numbers. It’s the kind of thing that makes you look like Robert Muldoon.
The second risk is the fact that Gull is Australian-owned. Sure, Gull’s a little battler, but it’s a little Aussie battler. It’s not a great look helping an Australianowned company undercut a Kiwi-owned business like Z.
There is always a chance that the Government weighs it up and thinks regulation is worth it. Maybe the kudos from grateful motorists outweighs the fury from business and a possible drop off in investment.
Or maybe, like every other threat to regulate petrol prices, it never happens because the goal has already been achieved. The petrol retailers get the message and hold off on further rises. Motorists get used to what they’re paying. The idea gets shelved.
Which is to say, get used to those prices. And to the PM, thanks for the extra tax.
Heather du Plessis-Allan is on Newstalk ZB in Wellington, weekdays, 8.30am-noon.
Regulating the petrol industry would be a risky move for the Government.