PM questions BP pricing tactics
WELLINGTON: New Zealanders are right to feel they are being unfairly treated after revelations about how BP sets its petrol prices, Prime Minister Jacinda Ardern says.
‘‘Certainly what’s been revealed today probably wouldn’t surprise some motorists,’’ Ms Ardern said yesterday afternoon in Wellington.
‘‘But to hear so blatantly that pricing decisions are being made that sit outside of the price of crude oil, that sit outside the exchange rate, or that sit outside operating costs will no doubt be raising eyebrows with consumers.
‘‘It certainly raised eyebrows with our minister, which is why she called them in for a meeting.’’
Energy Minister Megan Woods called BP executives into Parliament yesterday to explain how they set their prices at the pump.
The meeting came after an internal BP email leaked to Stuff showed a pricing manager outlining a plan to counter dwindling sales in Otaki, where the price of fuel was 20c more expensive than in the nearby town of Levin.
Instead of reducing the price in Otaki to make the station more competitive, the manager proposed an increase of the fuel price across the entire region, the expectation being that competitors would match the new price.
Ms Ardern said it raised questions about whether BP had broken any laws.
‘‘Regardless of whether they have or not, certainly motorists won’t look upon it as fair.’’
The Labourled Government plans to change the law to allow the Commerce Commission to compel petrol companies to provide information on pricing.
Not all companies disclosed their information to a fuel price inquiry launched by the previous National government.
The latest revelations about BP added impetus to the Government’s proposed law change, Ms Ardern said.
‘‘First we need to hear the explanation from BP. The usual explanations in this case just don’t exist.
‘‘There is a pretty high test that has to be met in our law for them to have fallen foul of around particular behaviours. So first we’ll seek an explanation and then we’ll consider what our options are.’’
Ms Ardern compared BP’s price hikes revealed in the leaked email to Labour’s plan to charge a regional fuel tax of between 3c and 4c a year.
‘‘We are having a debate right now about the application of an additional 3c over a year. They are putting up 3c in a day.
‘‘This demonstrates the kind of impact those decisions have on motorists and the scale of them.’’
BP said in a statement yesterday petrol prices in New Zealand were ‘‘highly competitive’’.
‘‘We adjust our prices in response to local competition, particularly in instances where discounting has become unsustainable, which is what occurred in the lower North Island last year.
‘‘Because the New Zealand fuel market is already highly competitive we actively manage our prices on a daily basis to remain competitive.’’
BP’s pricing tactic is sometimes referred to as crosssubsidising, whereby a company sets higher prices for one set of consumers in order to make it possible to sell at lower prices to another group of customers, Stuff reported yesterday.
A Commerce Commission spokesman said there were certain circumstances when crosssubsidising could amount to anticompetitive behaviour, but in most circumstances crosssubsidising did not raise issues under the Commerce Act.
Price matching or price following, which is the practice of a firm altering its pricing to match that of its competitor, is also allowed under the Act.
‘‘Fuel retailers appear able to engage in price matching because fuel prices are widely published and available to competing fuel retailers,’’ he said.
Without evidence of collusive behaviour among retailers agreeing on prices, the Commerce Commission did not intend to investigate BP, he said.