Why is petrol so expensive?

Commerce Commission may get extra powers to investigate why Kiwis are paying the most in the OECD

The AA has praised plans to give the Commerce Commission more power to investigate petrol companies as the Government looks to crack down on rising fuel costs.

New Zealand fuel prices have soared from among the lowest in the OECD to the highest, says a new report.

Energy and Resources Minister Megan Woods says the Government may intervene if it believes the industry is ripping off motorists. However, she does not favour price-setting.

The Commerce Commission may be able to investigate collusion among petrol companies after the report showed a massive swing in fuel prices in the past decade, trans- ferring hundreds of millions of dollars a year from motorists to petrol companies.

That would require an amendment to the Commerce Act so the commission could force companies to comply.

AA spokesman Mark Stockdale said the association fully supported the move.

“Changing the Commerce Act would mean the commission can get all the information they need and fuel companies would have no choice but to hand it over.”

Woods said short-term regulatory options included greater transparency and monitoring, or looking at barriers to enter the retail or wholesale markets.

“This Government is not prepared to sit by and watch New Zealanders

What we're looking at here is a market that isn't delivering fair and competitive prices.

paying unfair prices when they fill up their cars.

“What we're looking at here is a market that isn't delivering fair and competitive prices. It's not a quick fix and I'm not . . . saying I've got an early Christmas present for people and they've got cheaper petrol prices from tomorrow.

“But we have to ask serious questions around why it is that New Zealanders are paying the highest margins in the OECD. We don't know. We've had two reports and there aren't adequate answers, and that's why we need to make these changes.”

The Ministry of Business, Innovation and Employment's report on fuel prices said it had “reason to believe” the market was not fully competitive and that fuel prices were unreasonable.

It said that since 2008, New Zealand pre-tax premium petrol prices had soared from the “bottom third of OECD countries” to become the “most expensive”. The swing amounted to a “wealth transfer from consumers to producers, increasing the effective living costs of motorists”.

At the same time fuel prices were rising faster in Wellington and the South Island compared with the rest of the North Island.

Fuel prices are at their highest in three years, hitting 214.9c a litre for unleaded in central Wellington.

“Based on MBIE data, retail petrol margins have increased by over 18c per litre between 2008 and 2017, equating to an additional cost per motorist of close to $150 per annum over that period,” the report said.

An extra 1c a litre for petrol costs drivers about $32 million a year, the report estimates.

The report is an update on a report released in July under former minister and National MP Judith Collins, who had raised giving the Commerce Commission more powers.

Collins said the initial report was stymied because Mobil and Gull refused to provide the requested market information, which Z and BP did provide.

Energy and Resources Minister Megan Woods