Petrol prices are cap­i­tal­ism not col­lu­sion

Sunday Star-Times - - NEWS - Damien Grant

The Prime Min­is­ter is shocked at the re­cent price in­crease of petrol. She should be. The cost of petrol is in­cred­i­ble. Ac­cord­ing to an anal­y­sis by the AA, 45 per cent of the cost of petrol is taxes. This means, based on $2.40 a litre, only $1.32 is charged by the petrol firms. This ex­cludes the Auck­land levy.

This is a prod­uct that is pumped out of the Ara­bian desert, piped to a port, loaded onto a ship, trans­ported to half-way around the world, un­loaded, re­fined and dis­trib­uted by tanker to your lo­cal petrol sta­tion. All for $1.32 a litre. Milk, by con­trast, is ex­tracted from a cow a few hun­dred miles down the road and costs, on av­er­age, $2 a litre in your lo­cal su­per­mar­ket.

Prime Min­is­ter Jacinda Ardern is up­set the price has risen by 39c a litre dur­ing the past year. Which is ter­ri­ble, ex­cept when you con­sider the price of a bar­rel of oil went from $US50 last Septem­ber to $US70 now, and the kiwi dol­lar has fallen 10 per cent since she took of­fice.

Those two data points ex­plain the price in­crease but the gov­ern­ment is clearly vexed and is rush­ing through par­lia­ment a nasty piece of leg­is­la­tion, the Com­merce Amend­ment Act.

The Com­merce Act makes col­lu­sion be­tween firms il­le­gal and grants the Com­merce Com­mis­sion the power to in­ves­ti­gate and pun­ish pri­vate firms that act anti-com­pet­i­tively. This amend­ment al­lows the Com­mis­sion to go on fish­ing ex­pe­di­tions by in­ves­ti­gat­ing whole in­dus­tries at the whim of the Com­mis­sion or its min­is­ter.

This isn’t some me­an­der­ing in­quiry. The Com­mis­sion will have dra­co­nian pow­ers to com­pel tes­ti­mony and de­mand in­ter­nal com­pany doc­u­ments be pro­duced. There is no right to si­lence.

Dur­ing the past few days, Ardern in­di­cated that she would not be sur­prised to see the su­per­mar­ket in­dus­try on the list of those sub­jected to such an in­quiry. There is a pat­tern here.

Shane Jones rev­els in tar­get­ing spe­cific firms like Air New Zealand, the banks and Fon­terra. These at­tacks on pri­vate firms by peo­ple with po­lit­i­cal power is trou­bling. It is an in­sight into how this gov­ern­ments thinks.

They see con­spir­acy where there is com­merce and col­lu­sion where there is cap­i­tal­ism. The im­pulse is to bully, reg­u­late and leg­is­late.

We have had gov­ern­ments like this in the past. The last one was led by Sir Robert Mul­doon. Per­haps the Prime Min­is­ter can ask her deputy to ex­plain how that worked out.

She might be shocked at the an­swer.


The price at the pumps is un­doubt­edly painful but it pays to un­der­stand where the cost in­creases come from.

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