PM promises petrol action

A landmark report into the fuel industry by the country’s competition watchdog shows New Zealanders are being ‘‘ fleeced at the pump’’, Prime Minister Jacinda Ardern says.

Commerce Commission chairman Anna Rawlings had said earlier that was ‘‘not a term that we use’’ when releasing the draft findings of its market study into the $10 billion fuel industry.

But she said the commission’s current view was that the fuel market was not as competitive as it could be and the core problem was the lack of an ‘‘active wholesale’’ market for fuel. ‘‘Our preliminary findings suggest that many fuel companies are earning returns on investment that are higher than what we would consider a reasonable return to be.’’

The commission has set out proposals for how the wholesale market could improve, which it believes could flow through to cheaper prices at the pumps.

Ardern responded fiercely to the draft report’s findings. ‘‘Now the Commerce Commission is going to finish its report. It is likely then they will give us a steer on what happens next, but I can tell New Zealanders we cannot stand by while they are facing that pressure at the pump and being fleeced.’’

The Government instructed the commission to look into the fuel market in December on the back of concerns that petrol prices had got less competitive and that large variations had emerged in the price of fuel around the country. The commission is to finalise recommendations from its 424-page draft report on December 5, after which it could be back to the Government to decide whether to take action.

Concerns about competition in the fuel market increased after 2016, when the commission approved the acquisition of Caltex NZ’S business by Z Energy in a non-unanimous ruling that sent Z’s share price sharply higher.

Rawlings said Z Energy, Mobil and BP controlled 90 per cent of the country’s petrol and diesel supply, giving them ‘‘a significant advantage over any other potential rival importers, as their costs to deliver fuel are lower’’.

‘‘Not only have other fuel importers been unable to access the wholesale market, but the majors themselves have limited incentive to compete with each other during the terms of their supply contracts. As a result, competitive pressure does not appear to be driving down wholesale prices in New Zealand,’’ she said.

The commission said it was considering ‘‘two broad sets of options’’ to create a more competitive wholesale market for fuel. The options were to ensure ‘‘greater contractual freedom’’ that made it easier for independent petrol sellers to switch between suppliers, and allowing independents to ‘‘participate’’ in the majors’ joint infrastructure, such as their terminals.

It was possible the commission might recommend forcing the oil majors to sell fuel to retailers at an advertised ‘‘terminal gate price’’, associate commissioner John Small said.