Pressure points
Ardern says new legislation will give watchdog power to examine fuel prices
The excise tax for the National Land Transport fund increased by 3.5c a litre on September 30.
Aucklanders have also been hit with a regional petrol tax of 10c a litre, introduced in July.
The money from both will go towards increased spending on roads, road safety and public transport. The Government plans two more excise tax increases in the next two years.
Economic forces have also conspired to push up prices in the pump.
Since the start of the year, the international price of oil per barrel (in US dollars) has gone up 26%.
Meanwhile, the New Zealand dollar has fallen against the US dollar by 9.8% over that time. The upshot is, each NZ dollar buys less oil.
Prime Minister Jacinda Ardern has launched a scathing attack on fuel companies, telling reporters she thinks “consumers are being fleeced” at the petrol pump.
But one of the biggest fuel companies operating in New Zealand has pointed the finger right back at the Government, blaming — in part — the Auckland regional fuel tax and the increase in the national fuel excise for the higher petrol prices.
Yesterday, Ardern took aim at petrol companies’ high margins.
“I am hugely disappointed in the level of price that consumers are currently paying at the pump for fuel,” she said at her weekly post Cabinet press conference.
“Consumers, in my book, are being fleeced”, she said.
Given the concerns about “anticompetitive behaviour” in the fuel market, Ardern has prioritised the passing of the Commerce Amendment Bill.
This would give the Commerce Commission the power to conduct studies of fuel markets to better understand how they are working.
Ardern said the legislation was likely to pass in two weeks’ time.
“[Petrol companies] haven’t opened up their books to us in the past; so we’re going to have to force their hand.”
BP welcomed this announcement, with managing director Debi Boffa saying the Commerce Commission’s independence would provide greater assurance to the New Zealand public and to Government that Kiwis were paying a fair price for fuel.
She said BP reviewed prices daily to ensure they were as competitive as possible. “There are a number of factors that influence the price of fuel, some of which are not within our control, including cost of product, the exchange rate, and taxes and levies.”
Boffa said recent price changes had been influenced by increases to the cost of product and the weakening NZ dollar.
“In addition to this, the Government recently introduced the Auckland regional fuel tax plus increased the national fuel excise by 3.5 cents per litre [plus GST], impacting the price of fuel for motorists in Auckland and across the country.”
Z Energy chief executive Mike Bennetts said he was pleased to hear the Government would expedite the
passing of legislation, but disagreed that fuel companies were “fleecing” Kiwi consumers. “Z disputes that prices are unjustifiably high, and while margins have increased from an unsustainable level in 2008 which saw fuel majors exit New Zealand, it has not increased at the level suggested.”
The fuel market was highly competitive, Bennetts said, adding that Z would release its half-year financials in early November. “We look forward to sharing an audited, accurate view of our profits with the public then.”
Mobil NZ lead country manager Andrew McNaught said the company’s price increases since January 2018 have not moved in line with overall increases in tax, product cost and foreign exchange rates.
“We have directly absorbed some of these increased costs into our business and they have not been passed on to the consumer.”
AA’s petrol prices spokesman, Mark Stockdale, said the frustration Ardern levelled against fuel companies’ high margins reflected the feelings of many Kiwis nationwide.
He welcomed the Government’s fast-tracking of the Commerce Commission amendment.
“The reality is we don’t have all the answers, we don’t understand exactly why fuel prices are rising and how much of that is due to fuel companies rising their margins.”
Between 2008 and 2017, the margins importers were taking for themselves more than doubled from 7 per cent to 16 per cent, Ardern said.
“That increase represents a transfer
[Petrol companies] haven’t opened up their books to us in the past; so we’re going to have to force their hand. Prime Minister Jacinda Ardern
of wealth from petrol consumers to producers, to the tune of hundreds of millions of dollars a year.”
Between October 2017 and September this year, petrol prices had risen 39c — Ardern said just 6.8c per cent of this was tax.
National Party leader Simon Bridges said the Government should axe its fuel tax increases to provide immediate relief to motorists.
“The [Commerce Commission] inquiry will take months and any resulting changes could be years away.
“Meanwhile New Zealanders are paying record prices for petrol and the Government is collecting hundreds of millions of extra tax [dollars] from them.”