Taken for a ride

How your fuel costs are manipulated

BP has been summoned to Wellington after ‘‘alarming’’ evidence of its pricing strategy was revealed.

Energy Minister Megan Woods yesterday contacted the New Zealand office of the British fuel giant requesting a meeting in her office, after being shown a BP internal email.

The document shows a head office directive explaining a decision to increase prices in three lower North Island sites to protect sales in a neighbouring fourth, a ‘‘tactic’’ the company said had worked before.

Although the email relates to only one region, the area around Levin is the centre of widespread concerns of a major cross-subsidy in the New Zealand fuel market. The source of the internal email suggested the tactic was also used elsewhere in New Zealand.

The AA has long questioned whether petrol companies are charging much higher margins in Wellington, Christchurch and the rest of the South Island, to recover losses in areas from Levin and Masterton north.

Prices in Levin are frequently about 30c a litre lower than in Christchurch and Wellington, which appears largely due to the operation of Australian fuel discounter Gull, which does not trade in the South Island.

On Friday, the ‘‘national price’’ of regular petrol was raised by 3 cents a litre to $2.179. The price, used by the major petrol companies in Wellington and widely across the South Island, but in only small pockets

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elsewhere, is now at the highest level since 2014.

BP has refused to comment on the email beyond a terse statement in which it called on Stuff to reveal how it came into possession of it.

‘‘We do not give permission for it to be used by you in any form,’’ spokeswoman Leigh Taylor said.

‘‘An unsustainable level of discounting was in effect . . . in the area you have referenced. As a result, BP took an independent decision to improve its competitive position in the wider area.’’

Woods said it appeared motorists were paying ‘‘over the odds’’ at the petrol pump and the issue was one of importance.

‘‘There’s strong public interest in making sure Kiwis are getting the best possible deal at the pump. It’s alarming to see evidence that suggests that’s not always happening.’’

Late last year, Woods asked officials to come up with short-term ways to boost competition in the petrol market.

So far, nothing has been announced, but she said BP’s tactics backed the Government’s decision to give greater powers to the Commerce Commission to ‘‘get to the bottom of why some Kiwis appear to be BP spokeswoman Leigh Taylor

paying over the odds for petrol’’.

AA spokesman Mark Stockdale said it was difficult to get a straight answer out of the petrol companies.

‘‘More needs to be done to get the facts and give confidence to the consumers that the market is operating fairly and confidence to the Government that the market is operating fairly and if it isn’t then the Government might consider intervention.’’

BP New Zealand made a pre-tax profit of $215 million in 2016. A year earlier it paid its parent company a $300m dividend.

Headquartered in one of the most exclusive neighbourhoods of London, BP is one of the largest companies in Europe, with a market capitalisation of about $200 billion.

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