New law to slash petrol price

Petrol prices could be slashed by 18 cents a litre when new laws are passed to increase competition and force retailers to display prices at the pump.

The Government has said it is ready to act swiftly on a Commerce Commission study on the fuel market and its competitiveness.

The Government wanted the prices to come down as ‘‘fast as possible’’, but was looking at introducing a law early next year and passing it by the middle of 2020, Commerce and Consumer Affairs Minister Kris Faafoi said.

As expected, the commission recommended regulations to require retailers to display premium fuel prices on price boards, and fuel cap stickers ‘‘to help consumers understand what grade of fuel their vehicle requires’’.

It also recommended requiring fuel importers to make their wholesale petrol prices transparent.

Faafoi said the best price gauge for consumers was what was already happening where there was increased competition – prices dropped by 18 cent a litre and in some places 32 cent a litre.

‘‘I think we have got a lot of other players that are keen. The way the market has been set up was probably a barrier for them to expand and this is what we are looking to change.’’

He had written to fuel companies to suggest they move now on displaying premium brand petrol prices on forecourt display boards, before regulation comes in.

AA spokesman Mark Stockdale said about 20 per cent of petrol sold was premium. Because stations did not always advertise 95 or 98 Octane prices in the same way they did 91 Octane or diesel, people were often paying much higher prices for premium than they should be.

In some cases, premium was selling 40c to 50c a litre higher than 91 Octane, which Stockdale said was ‘‘outrageous’’.

If the Government acted on the recommendations, ‘‘this change will absolutely improve competition’’, he said.

‘‘And in the meantime, AA calls on the companies to voluntarily start doing this where they can . . . They don’t need to wait for regulation.’’

The study has also recommended requiring the petrol majors – Z, BP and Mobil – to reveal the price they will sell fuel on the wholesale market to independent retailers, the so-called ‘‘terminal gate pricing’’.

Stockdale said this was already in place in other countries including Australia, and was bound to increase competition.

Dave Bodger, of independent retailer Gull, said his company had been calling for terminal gate pricing for years.

‘‘We’ve got to see how it goes through regulation and it’s with a lot of caution [that I welcome regulation] . . . but it will open up competition,’’ he said.

BP responded to the report by saying it needed to read it more fully, but managing director Debi Boffa said the company would work with the Government ‘‘to progress next steps in the interests of consumers and the market’’.

Commerce Commission chair Anna Rawlings said the study showed many fuel companies ‘‘have been making persistently higher profits over the past decade than we would expect in a workably competitive market’’.

‘‘For consumers, this means they are paying higher pump prices than could be expected,’’ she said.

‘‘I think we have got a lot of other players that are keen.’’ Commerce and Consumer Affairs Minister Kris Faafoi