Un­der scru­tiny Get­ting heavy over fuel,

Months af­ter a probe ques­tioned prices, the fuel in­dus­try ap­pears head­ing for deeper scru­tiny, writes Hamish Ruther­ford.

Sunday Star-Times - - BUSINESS -

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.

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