Chch leads petrol price falls
Christchurch is leading the country in petrol price falls – but the AA is asking why it didn’t happen sooner.
Research by economist Shamubeel Eaqub found that, over the past year, the price of 91 petrol had fallen by 29c a litre across the country, by 24c in Auckland and by 40c in Christchurch.
Eaqub said that in June last year, Auckland fuel prices were 10c to 15c lower than in Christchurch. But in the two weeks to June 14 this year, they were 4c higher, excluding the regional fuel tax. “The outsized price falls in Christchurch are notable. This is of obvious benefit to Christchurch fuel buyers, who are now paying a lot less for their fuel.”
He said, because of the amount of money that was spent on petrol, even a small difference in perlitre price could add up.
AA spokesman Mark Stockdale said it was good news for South Island motorists.
But he said the reduction in prices for the South Island was only a recent phenomenon and could have happened earlier.
“For a long time, Auckland had the cheapest and most competitive fuel market. Even with the introduction of the regional fuel tax, it was still competitive.
“By comparison, the South Island along with Wellington had the highest prices in the country. We attributed that to the lack of competition in the South Island compared to the North Island.”
He said that had changed recently, with more price competition in the south, which seemed to be driven by retailer NPD.
‘‘During level 4, the cheapest prices in the country were in Christchurch and Canterbury. There’s clearly a bit of a change which is great for the South
Island, having missed out on the competitive pricing that has existed in the North Island for a long time. Prices in the South Island fell more sharply than the fall in commodity prices in February.
‘‘What’s changed, that’s the interesting thing. NPD has been in the South Island market for decades. For a long time, their prices were no more competitive than the other brands in the South Island. Despite the fact NPD could be regarded as a no-frills brand, their prices were arguably too high for too long. It looks like they’ve changed their business model.’’
He said that might have been a response to the threat of the expansion of retailers into the south, such as Gull and Waitomo.
But Eaqub said the numbers could indicate Aucklanders were now paying too much.
‘‘Unless there has been a marked change in the cost of delivering fuel and cost of doing business, it could indicate Aucklanders are paying 5c to 15c too much for their fuel, excluding the 11.5c regional fuel tax,’’ he said.
‘‘We estimate such a price difference would add $45 million to $140m to Aucklanders’ annual fuel bill across retail and business users.’’
At Waitomo Fitzgerald, in Christchurch, 91 was $1.66 a litre yesterday. At Mobil Karangahape Rd in Auckland, it was $1.98. At Caltex Old Hutt Rd in Wellington it was $1.89.
NPD chief executive Barry Sheridan said competition was the key to lower fuel prices for motorists. ‘‘North Island motorists are simply paying too much. We want to make people aware of the significant discrepancy between north and south pump prices. This clearly signifies a lack of genuine competition in the North Island fuel market.
‘‘NPD has been driving discount fuel pricing for the last three years but more effectively within the last 10 months as we have completed multiple new retail developments over the South Island.
‘‘We are surprised to see North Island prices at the high levels they are today in comparison to our current South Island pump prices.’’
Eaqub said independent retailers were most likely to locate new retail sites close to the majors.
‘‘Independents are competing aggressively in Christchurch and Dunedin. The majority of new fuel stations to open over the past year were independents.’’
In Auckland, 25 per cent of growth was independent retailers compared to 95 per cent in Christchurch and 100 per cent in Dunedin. In Wellington, 70 per cent of growth was independent retailers.
He said the outsized falls in retail fuel prices over the same period confirmed the Commerce Commission’s market study view that competition from independents reduced prices and benefits consumers.