Minister: Petrol market ‘broken’ and uncompetitive

Energy Minister Megan Woods says she believes the petrol market is ‘‘broken’’ after a meeting with BP executives to discuss its pricing tactics.

Woods instructed BP to come to Wellington for a meeting in the Beehive after being shown an internal email in which a BP pricing manager outlined a plan to hike prices at a number of lower North Island sites in an attempt to protect falling sales at a fourth.

‘‘Rather than just reducing the price in O¯ taki we will be looking to increase the price at Paraparaumu & Ka¯ piti and also Levin,’’ a BP pricing manager wrote in the email, revealed by Stuff on Monday. It adding that the strategy had been working, with Z Energy matching a recent price increase.

Woods said she believed the actions were cynical and unlikely to be isolated to BP.

‘‘I remained convinced that what we’re seeing here is an example of a market that isn’t working for consumers. I think we’ve seen an example of some pretty cynical behaviour. I don’t think this is isolated,’’ Wood said.

‘‘People are quite possibly paying over the odds for petrol when they go to the pump,’’ Woods said, pointing to an official report which claimed ‘‘hundreds of millions of dollars of wealth’’ could be being transferred from motorists to petrol companies.

‘‘I actually think this is an example of a broken market, a competitive market is one where players can come in freely, and there can be competition and consumer benefit from that.

‘‘What we’re seeing is an example from a fuel company, and I don’t have any reason to believe this is isolated, where price setting is going on to actually take the prices up to the highest level rather than give people the best deal that they can expect in a competitive market.’’

Woods has directed officials to conduct a preliminary costbenefit analysis of possible regulator interventions, which may be recommended by a possible future Commerce Commission market study.

Earlier Debi Boffa, the BP New Zealand managing director, nervously delivered a short prepared statement before walking away under questioning for her meeting with Woods. The company has refused to be interviewed on the email, informing Stuff that it did not have the company’s permission to tell the story and asking to know how it came into possession of the email.

She said she would ‘‘be looking to reassure [Woods] that BP does operate in a highly competitive and dynamic market here in New Zealand. Actually things that are described in that email reflect that’’.

Boffa, who has had virtually no public profile since she took the job in 2017, claimed BP was only seeking a ‘‘sustainable’’ return. The company made a pretax profit of $215 million in 2016.

‘‘I think we’ve seen an example of some pretty cynical behaviour.’’

Energy minister Megan Woods