Fuel price gap angers drivers

By Peter de Graaf


A petrol price gulf between the Bay of Islands and Whangarei is due to the city's intense competition for drivers' dollars coupled with a lack of competition further north, experts say.


Far North motorists already hurting from the latest petrol price hikes - blamed on a combination of a weakening dollar and a new tax on July 1 - have contacted the Advocate wanting to know why they pay significantly more for petrol than Whangarei residents.


The exact difference varies by day, site and company. It tends to hover around 5-6 cents a litre but can be as high as 12 cents for the same brand.


The chief reason appears to be competition. Most petrol stations in the Bay of Islands, where competition is relatively light, charge a few cents more than the national price set by the big fuel companies. In Whangarei, a competition hotspot, pump prices are usually below the national price. The result can be a significant difference in pump prices despite a distance of at most 90km.


Mark Stockdale, a senior analyst at the AA, said Whangarei enjoyed what was known as the ''Gull effect''. With lower overheads and cheaper petrol than the big companies, Gull forced other service stations to drop their prices. Such competition hotspots were found in Whangarei, Auckland, Rotorua, Manawatu and Wairarapa.


''Everyone benefits from the presence of Gull, even if they don't buy fuel there. It would be great if that kind of competition was everywhere,'' Mr Stockdale said.


Ironically, however, it could lead to higher prices elsewhere. If a lot of motorists tanked up in Whangarei, Bay of Islands service stations might put up their prices to make up for lower volumes.


This week competition in Whangarei has been even hotter than usual with Gull dropping its pump prices by 10 cents from Thursday morning until noon today.


Consumer NZ senior writer Bill Whitley agreed that the single biggest factor in petrol price differences was competition, though volume and distance from a port played a part.


''Like most things, people will charge what they can get away with.''


BP spokesman Jonty Mills said all Northland's BP stations were supplied from Marsden Pt at the same wholesale price. A delivery fee based on volume and distance from Marsden Pt was relatively small.


Some BP service stations, such as that on Whangarei's Riverside Drive, were directly owned and operated by BP so the company set the pump price. Most, however, were independently owned so the owner set the price.


In areas with little competition they could choose to set a price above the national average. In places with fierce competition they might sell below the national price and hope to make up for it by selling a greater volume.


* On Thursday, July 26, the national price of 91 octane petrol was $2.27 to the nearest cent. In Kerikeri it was selling for $2.29 at both BP and Caltex, while in Whangarei it was selling below the national price with BP Maunu charging $2.23 and Caltex $2.19. Mobil was $2.10. Some days the difference is bigger still - on July 7 a litre at Z cost $2.13 in Whangarei but $2.25 in Paihia; on July 12, Caltex was charging $2.29 in Kerikeri but $2.20 at Oakleigh.


Money saving tips


The single biggest thing motorists can do to cut their fuel bills is to keep their tyres pumped up, an AA expert says.


Mark Stockdale said the AA's research had shown driving on under-inflated tyres increased fuel consumption by 8 per cent. Tyres should be checked and inflated to the recommended pressure once a month.


Easing up on the brake and accelerator could lead to even bigger gains - up to 20 per cent - but changing driving style was harder than checking the tyres. Drivers who had the air-conditioning on all the time could save another 9-10 per cent by using it sparingly and only when needed.


Supermarket fuel vouchers offered savings, as did fuel discount schemes such as AA's Smartfuel. Far North motorists could tank up any time they were in Whangarei, Mr Stockdale said.


Kerikeri-based company FNF Fuels also offers a fuel discounting scheme, saving 9 cents a litre at most Mobil outlets in Northland and 4.5 cents at all Caltex stations.


Users can choose between a discount from the pump price (a good option in places like Whangarei, where the pump price is often below the national price set by fuel companies) or a discount from the national price (good for drivers in the Far North, who effectively get a double discount because their pump prices are usually higher than the national price). The scheme has a $16 sign-up fee and a charge of 0.5 cents a litre. 

- Northern Advocate

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