BP sum­moned to meet­ing at the Bee­hive

The Hutt News - - FRONT PAGE - HAMISH RUTHERFORD

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

En­ergy Min­is­ter Megan Woods on Sun­day 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 head­of­fice di­rec­tive ex­plain­ing a de­ci­sion to in­crease prices in three lower North Is­land sites in an at­tempt to pro­tect sales in a neigh­bour­ing fourth, a ‘‘tac­tic’’ the com­pany said had worked be­fore.

‘‘Rather than just re­duc­ing the price in taki we will be look­ing to in­crease the price at Para­pa­raumu and Ka¯piti and also Levin,’’ pric­ing man­ager Suzanne Lu­cas wrote, adding that the ‘‘tac­tics’’ al­ready seemed to be work­ing, with the Z En­ergy sta­tion in Para­pa­raumu match­ing other re­cent price in­creases.

Lu­cas went on to re­mind staff at af­fected petrol sta­tions of BP’s ‘‘stan­dard response’’ to mo­torists who com­plained about the prices that ‘‘where we can com­pete we will’’.

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

Na­tional Party spokesman for en­ergy and re­sources Jonathan Young said what hap­pened in taki was ‘‘dis­ap­point­ing’’.

Rather than com­pet­ing for the best out­come for con­sumers, BP was fo­cused on how to get the best re­turn from the con­sumer, Young said. ‘‘We need to get a bal­ance between both.’’

That was why giv­ing the Com­merce Com­mis­sion more power to study petrol mar­ket pric­ing was so im­por­tant, he said. The Com­merce Amend­ment Bill, in­tro­duced to Par­lia­ment on March 28, will give the Com­merce Com­mis­sion the power to study the struc­ture and be­hav­iour of mar­kets and com­pel or­gan­i­sa­tions and busi­nesses to pro­vide in­for­ma­tion.

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 around 30c a litre lower than in Welling­ton and Christchurch, ap­par­ently largely due to the op­er­a­tion of Aus­tralian fuel dis­counter Gull.

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 else­where, is now at its high­est level since 2014.

BP has re­fused to com­ment on the email be­yond a terse state- ment, 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.’’

In late 2017 Woods asked of­fi­cials to come up with short­term ways to boost com­pe­ti­tion in the petrol mar­ket. So far, noth­ing has been an­nounced, but Woods said BP’s tac­tics backed the Govern­ment’s de­ci­sion to give greater pow­ers to the Com­merce Com­mis­sion.

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 pre­tax profit of $215 mil­lion in 2016. A year ear­lier it paid its parent com­pany a $300m div­i­dend. BP is one of the largest com­pa­nies in Europe, with a mar­ket cap­i­tal­i­sa­tion of around $200 bil­lion.

CAMERON BUR­NELL/ STUFF

The BP petrol sta­tion in Levin. A BP in­ter­nal email out­lines how the com­pany planned to hike prices in Levin in a bid to pro­tect sales in

taki, in the hope that ri­val com­pa­nies would fol­low. In­set, En­ergy Min­is­ter Megan Woods.

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