NZ petrol prices unfair: minister

Rising petrol margins are costing New Zealand 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 report on retail petrol margins from the Ministry of Business, Innovation and Employment (MBIE), which found that, if tax is excluded, 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 the retail market seems inevitable.

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

In the meantime Energy Minister Megan Woods said she had asked officials to monitor the market ‘‘and explore options for regulatory interventions to enhance competition as required’’ as she warned prices were not fair.

‘‘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,’’ Woods told The AM Show.

‘‘The evidence suggests the market isn’t delivering competitive prices.’’

Although 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.

Shares in Z Energy, which also owns the Caltex brand in New Zealand,

dropped 2.6 per cent yesterday after the news.

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 should be created, saying consultancy Hale & Twomey could not find a functioning wholesale market overseas.

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.

Figures published by MBIE claim margins have been growing steadily since 2008, and are now at the highest level in about 20 years, before Gull and Challenge (which is now owned by Z Energy) entered the market.

That inquiry’s report, released in July, found the market may not be operating competitively, but a definitive position could not be reached because some companies had refused to release information requested from them. Collins revealed those companies were Gull and Mobil.

The report also pointed to a sharp variation in prices across the country, with Wellington and the South Island generally paying significantly more than most parts of the North Island.

Anecdotal claims suggested that fuel in some parts of the country may be being sold below what it is costing the fuel companies to supply it, adding to suspicions that some motorists are effectively subsidising others.

On Tuesday the Automobile Association (AA) demanded New Zealand’s fuel companies cut the price of petrol by 4 cents a litre, claiming margins are now at a level when politicians intervene.

Petrol prices in many parts of the country are at the highest level in three years, at $2.149 a litre. The so-called ‘‘main port’’ price is in place in Wellington and many parts of the South Island.

At the start of November prices rose by 9c a litre in eight days.