Market study aims for fuel ‘fair price’
Petrol prices will come under the microscope, with Prime Minister Jacinda Ardern saying questions remain about whether the market is competitive.
Ardern and Commerce and Consumer Affairs Minister Kris Faafoi announced yesterday that the retail fuel market would be the first market study to be undertaken under new powers granted to the Commerce Commission in November.
The move is far from a surprise. While Faafoi had earlier pledged to ‘‘take the politics out’’ of market study powers, Ardern signalled that retail fuel was likely to be the first study of its kind back in early October, claiming motorists were being ‘‘fleeced’’.
‘‘It is unacceptable that we’re unable to say with any certainty that New Zealanders are paying a fair price for fuel,’’ Ardern told reporters at her weekly post-Cabinet press conference.
The Commerce Commission will be required to publish its study by December 5, 2019, despite its chairman, Dr Mark Berry, telling MPs on November 29 that attempting to complete the study within a year could put pressure on the organisation.
Ardern said it was possible an interim report would be completed within nine months.
An earlier study of the industry, undertaken by the Ministry of Business, Innovation and Employment (MBIE) in 2017, said there were signs that the market may not be operating in a competitive way.
The MBIE study was hampered by the fact that the fuel companies were under no legal obligation to co-operate.
However, the commission now has the power to compel companies to provide information.
Concerns over petrol prices increased as petrol prices rose sharply in the second half of 2018, approaching $2.50 in many areas.
Since then, prices have dropped sharply as the New Zealand dollar strengthened and global oil prices plunged, amid concerns of a global slowdown in growth.
But Ardern said her concerns about petrol prices remained. New Zealand had close to the highest prices for petrol in the OECD when tax was excluded, whereas in 2008 New Zealand had among the lowest prices.
Faafoi said several possible markets were suggested for the first study but the retail fuel market ‘‘clearly met the test for investigations’’.
‘‘There are existing indications of competition problems in the retail fuel market that are of concern to me, such as the more than doubling of petrol and diesel importer margins over the past decade,’’ Faafoi said.
The terms of reference for the study will be published in the New Zealand Gazette tomorrow.
New Zealand’s petrol companies have said they would welcome such a study, as they defended competition in the industry.
‘‘The Commerce Commission are the right people to do this work because they have the level of independence required to confirm New Zealand has a fair and competitive retail fuel market,’’ BP’s New Zealand managing director, Debi Boffa, said in a statement.
Automobile Association (AA) spokesman Mark Stockdale welcomed the fact that the commission had been given a year to undertake the study.
However, Stockdale said he was disappointed that the AA had not been asked for input into the study’s terms of reference.