Energy Minister Judith Collins says the Government will only intervene in the fuel market as a last resort if an inquiry into fuel pricing shows petrol companies are ripping off consumers.

Collins has begun an inquiry into the fuel industry after concern about rising margins between what fuel is imported and sold for.

Asked if the Government would intervene if the inquiry showed consumers were being ripped off, Collins said it would be reluctant to do so.

"You have to be very careful about that. It would be a last resort, and I don't think that's going to be necessary. I think having a bit of sunlight on the issue will help sort out the market pretty quickly."

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She said there had already been a drop in margins of close to six per cent in the last week. "I've always said the best outcome would be that the margins dropped down without us having to do very much."

Labour's Energy spokesman Stuart Nash said he had long called for an inquiry and applauded Collins for going ahead with it.

He said the inquiry should be able to identify whether the companies were making ordinary profits, or extraordinary ones. However, if it did find the companies were making "extortionate" profits, it was up to the Government to decide what to do.

"And that's the real test. What it could mean is the Government are going to be asked to intervene in the market. This Government has proven it doesn't have much of an appetite to intervene in markets.

But we have a minister now who has shown some strength in this, and seems to be going hard."​

The inquiry by the Ministry of Business, Innovation and Employment will report back in June - but depends on the fuel companies handing over the financial and other information it needs.

That will be on a voluntary basis, but Collins indicated the fuel companies had been put on notice to cooperate or face a more intensive inquiry with powers to compel them to hand it over.

"They've all agreed that they will provide us with what they can and that they will cooperate. I think they're fully aware that although this is being done with their cooperation, there are other alternatives.

They are realistic people and understand those alternatives will take longer and are more costly for everybody."

Nash also hoped the fuel companies would oblige, saying they would face an inquiry with more muscle, such as a Ministerial Inquiry.