Get used to high petrol prices

Herald on Sunday - - REVIEW - Heather du Plessis-Al­lan

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.

Photo / Dun­can Brown

Reg­u­lat­ing the petrol in­dus­try would be a risky move for the Govern­ment.

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