Under scrutiny Getting heavy over fuel,
Months after a probe questioned prices, the fuel industry appears heading for deeper scrutiny, writes Hamish Rutherford.
New Zealand’s fuel industry appears to be destined for a new, tougher probe into petrol prices which would compel companies to hand over detailed data on profits.
The Commerce Commission is poised to be granted new powers to initiate market studies without evidence of collusion, and industry figures now see fuel retailers at the front of the queue.
In July a government inquiry found that retail margins on petrol had risen sharply since 2011, in a way which had not been matched by investment.
‘‘[W]e cannot definitely say that fuel prices in New Zealand are reasonable, and we have reason to believe that they might not be,’’ the study concluded.
But the report has only intensified arguments about competitiveness in the multi-billion dollar retail fuel market.
It soon emerged that Mike Bennetts, chief executive of Z Energy, New Zealand’s largest petrol company, had privately rubbished the fuel market report.
In a terse letter to Energy Minister Judith Collins, Bennetts said the report was ‘‘incomplete in terms of both content and participation; quality was compromised by immovable deadlines...[and] was based on a very poor level of understanding of this industry’’.
Bennetts threatened Collins with a public call for a market study by the competition watchdog to clear up doubts surrounding the industry.
Collins responded by questioning Z Energy’s own information. She has also accused Mobil and Gull of undermining the report by refusing to hand over information as promised.
‘‘It’s very difficult when two of the major players in the area, having said first that they would provide the information requested, then choose to provide some of the information [but] not all of it,’’ Collins said.
Mobil refused to comment, beyond a statement asserting that it had engaged to the ‘‘highest level possible’’ with the inquiry.
Collins has said the inability to force the petrol companies to provide information to the inquiry was one of the reasons Cabinet recommended giving greater powers to the competition watchdog. Dave Bodger, Gull New Zealand’s general manager, said irrespective of ongoing coalition negotiations, it appeared the political mood was for greater intervention ‘‘in some way, shape or form’’ in the sector.
‘‘I don’t think you need much more information than a 20 cent a litre difference between most of the North Island, excluding some suburbs, and Wellington and all of the South Island, to actually know where you’re going on this.’’
AA spokesman Mark Stockdale said if the competition watchdog was granted market study powers ‘‘the AA would expect the fuel industry to be one of the first industries that would be targeted’’.
The AA welcomed the latest study; however, the findings were ultimately ‘‘a bit indifferent’’ with parties on both sides questioning a lack of firm answers.
‘‘It reinforced the idea that motorists has cause for concern, but didn’t say for sure, and couldn’t provide any real solid answers.’’
While motorists wanted the Government to ‘‘do something,’’ it was not clear deeper studies would actually lead to change.
Stockdale said in Australia the ACCC conducts annual studies investigating the activities of the fuel industry, but it was not clear that it improved competition.
While a study into fuel margins found there was reason to believe prices may be too high, debate over competition in the industry has only intensified.
Z Energy chief executive Mike Bennetts.