Petrol market ‘could be regulated’

Rising petrol margins are costing Kiwi motorists hundreds of millions of dollars a year, an official report claims, prompting a public threat of regulation from the Government.

Yesterday, the Government released the latest reports on retail petrol margins from the Ministry of Business, Innovation and Employment (MBIE), which found that excluding tax, prices are the highest in the OECD.

‘‘The potential wealth transfer from consumers to fuel suppliers since 2008 is likely measured in the hundreds of millions of dollars per annum,’’ the report said.

A further probe into whether the retail market is competitive seems inevitable; the previous studies were frustrated by a refusal by some companies (Mobil and Gull) to release information requested.

Commerce Minister Kris Faafoi has indicated that the process to give the Commerce Commission greater powers to probe markets where it suspects a lack of competition would be fast-tracked, but was unlikely to be completed until the end of 2018.

In the meantime, Energy Minister Megan Woods said she had asked officials to explore options for measures which could boost competition.

‘‘All the evidence that I have seen is pointing to the fact that people aren’t paying a fair price at the pump, depending on what part of the country they’re in.’’

"The potential wealth transfer from consumers to fuel suppliers since 2008 is likely measured in the hundreds of millions of dollars per annum." MBIE report on New Zealand fuel margins

While she would not provide a timeframe, Woods said action would not necessarily wait for the outcome of any future review by the competition watchdog. ‘‘I’m not content to just sit by and wait. I want to see whether there’s shorter-term options.’’

While it is the clearest public threat to regulate made to date, the report reveals that more than a year ago National began exploring how it might intervene in the petrol market.

The report gave Woods a suite of options for possible regulations of the industry, but these have not been released to the public. However, MBIE urged the Government to reject an earlier recommendation that a wholesale market for fuel be created, saying energy consultancy Hale & Twomey could not find a functioning wholesale market overseas.

AA spokesman Mark Stockdale said MBIE had effectively repeated there was a need for changes to the Commerce Act, while recommending against suggested regulatory measures.

‘‘We haven’t really learnt anything and we’re no further ahead,’’ Stockdale said.

The AA had raised concerns about rising margins and regional pricing variation for several years, without suggesting action be taken, aside from calling for petrol station price boards to be required to display the price of all grades of fuel, including premium.

‘‘We’ve never said what can be done about [rising margins], because we’re not too sure what can be done in a free market economy. We’re as interested as anybody as to what the solutions are.’’

Z Energy spokesman Jonathan Hill said it would welcome a thorough review.

‘‘Z understands the public interest in all aspects of energy pricing and will welcome and participate fully in any independent study into the operation of the industry.

‘‘We need to categorically and once and for all get to the bottom of this issue and provide the facts and assurance that consumers and stakeholders want and deserve. The reviews so far have been inconclusive and a Commerce Commission market study seems a sensible way to go about it.’’

Petrol prices have become increasingly political in 2017 since former energy minister Judith Collins ordered an inquiry to ‘‘get to the bottom’’ of rising margins on petrol.

Prices in many parts of the country are now the highest in more than three years.