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, according to a new report.

Energy and Resources Minister Megan Woods says the Government may intervene if it believes the industry is ripping off motorists at the fuel pump.

However, she did not favour price-setting.

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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, transferring 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 supports 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. If that's what it takes - so be it."

Woods said that 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 Zealander 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 standing here today 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."


Read more:
Kiwis paying too much for petrol, Energy Minister Megan Woods says
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AA calls on fuel companies to cut petrol prices - saying Govt needs to step in if they won't

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 to the rest of the North Island.

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

"Based on MBIE data, retail petrol margins have increased by over 18 cents 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.

"This means that 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 is an update on a report released in July under former minister and National MP Judith Collins, who had raised the issue of 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.

National's energy spokesman Jonathan Young said he did not support Government intervention, adding that fuel prices were complex and had to consider factors such as commodity prices and the strength of the dollar.

He supported changes to the Commerce Act, but was lukewarm on Government intervention.

"I would be quite concerned in wondering what that intervention is. The best result is to give the Commerce Commission some market study powers."

Minister of Commerce and Consumer Affairs Kris Faafoi has now asked officials to fast-track work to empower the Commerce Commission to investigate collusion without evidence, and force companies to provide information on how the market functions.

He said he wanted the commission to have the powers, which meant changing the Commerce Act, by the end of next year.

Faafoi said the powers for the Commerce Commission would not be limited to the fuel industry.

"The Commerce Commission will have the tools to look into any market if we don't think it's operating properly."

Act leader David Seymour said prices were too high.

"If the Labour Party thinks that petrol's too expensive, why the hell did they just put a 10c tax on it?"

In the meantime, Woods has asked MBIE to continue monitoring the market and to make regulatory recommendations to improve competition, such as by encouraging other players in the market.


The oil majors say they are happy to work with the Commission.

Andrew McNaught, lead country manager for Mobil, said his company was reviewing the report.

"We would happily engage with the Commerce Commission to the highest level possible in order to improve the understanding of our business operations and practices in New Zealand.''

Z spokesman, Jonathan Hill, said his company's submission to MBIE ahead of the release of the report was that seeking to remove market share data from the ''borrow and loan scheme'' would achieve nothing, and that there were no barriers to new entrants entering the market.

"Z understands the public interest in all aspects of energy pricing and will welcome and
participate fully in any independent study into the operation of the industry. We need to categorically and once and for all get to the bottom of this issue and provide the
facts and assurance that consumers and stakeholders want and deserve.''

We need to categorically and once and for all get to the bottom of this issue and provide the facts and assurance that consumers and stakeholders want and deserve

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He said the industry had changed markedly over the last decade, moving from four
multinational companies selling the same products at the same prices, to having 21 brands in the market with different cost structures and operating models. Now 70 per cent of retail service stations were owned and operated by independent business people who set their own prices.

A BP spokeswoman said the company agreed with recommendations to provide for the Commerce Commission to conduct a full and thorough examination.

''We've fully participated in the work done to date, working closely with the Minister and MBIE throughout, and will continue to do so.''