COMMENT: As prices at the pump hit record highs, the blame game is in full swing.
The Government points the finger at a rapacious rent-seeking cartel of oil companies and plans to sic the Commerce Commission onto them.
The Opposition blames the Government's unquenchable thirst for tax.
But official figures — helpfully updated weekly by the Ministry of Business, Innovation and Employment — show that of the 42c a litre increase in retail petrol prices over the past year, 30c is down to the landed price, the cost of importing the fuel into New Zealand.
The big driver there is a resurgence in global crude oil prices.
The Dubai benchmark price, the relevant one for us, has climbed from US$54 a barrel a year ago to over US$80 now. In addition, over the same period the New Zealand dollar has depreciated by more than 8 per cent against the US dollar.
Global crude prices have swung around a lot in recent years. Dubai peaked at over US$120 a barrel in 2012 but dropped below US$30 for a while in early 2016.
In the year ended August, New Zealand spent $6.8 billion importing crude oil and petroleum products, Statistic NZ reports, entirely explaining the overall $4.8b trade deficit and then some. Funding that deficit through borrowing from, or selling assets to, the rest of the world inevitably reduces national income in the future. It is another reason to wean ourselves off the stuff.
Meanwhile, what officialdom calls the importer margin — the oil companies' gross margin, or the difference between the pre-tax retail price and the landed cost — accounts for very little of the past year's increase in retail prices, rising 1.2c to 31.2c a litre.
But that does not mean Prime Minister Jacinda Ardern's swipe at the oil companies is misplaced, because the last year is a bit of a departure from the trend of fattening margins, which have more than doubled since the recession.
The previous Government commissioned a study last year of the fuel market, prompted by the observation that over the previous nine years New Zealand had gone from being in the bottom third of the OECD in pre-tax premium petrol prices to the most expensive, and by a rising spread between prices in the South Island and Wellington, on the one hand, and the rest of the North Island on the other.
We cannot definitely say that fuel prices in New Zealand are reasonable, and we have reason to believe that they might not be.
The study by NZIER, Grant Thornton and Cognitus Economic Insight, bedevilled by opacity in an industry marked by vertical integration, could not really get to the bottom of it. But it did find capital expenditure, such as on port upgrades, did not explain the difference in margins.
It concluded: "we cannot definitely say that fuel prices in New Zealand are reasonable, and we have reason to believe that they might not be."
There does seem to be a case to answer. But any policy outcome from the Commerce Commission's market study, once empowering legislation is passed and terms of reference agreed, would not happen until well into next year.
So what about the tax component of retail petrol prices, which clicked up another 4c last week to just over $1 a litre?
That is a national figure and does not include the Auckland regional fuel tax or the impact, currently just under 5c a litre, of the emissions trading scheme (ETS). The money that oil consumers pay under the ETS does not flow to the Government, but to whomever the oil companies bought New Zealand units from, but it is a cost imposed by the state.
In the past year, the increased tax take (including GST but excluding regional fuel tax) accounts for 9c of the 42c a litre increase in retail prices, or 10.8c if you include the ETS.
The Leader of the Opposition, Simon Bridges, has called on the Government to axe its fuel tax increases, especially in light of the fatter-than-expected $5.5b fiscal surplus for 2017/18 reported on Tuesday.
The Government took in $1.9b of fuel excise and probably around $800 million of GST from motorists last year, not to mention $1.5b of road user charges. Overall tax revenue was $700m ahead of Budget forecasts, contributing to an operating surplus, excluding gains and losses, $2.4b higher than forecast in the May Budget.
So why not give drivers a break?
Because fuel prices are too low, not too high.
This week we also received the latest, sobering report from the Intergovernmental Panel on Climate Change (IPCC), spelling out the adverse impacts we can expect from even another half a degree of global warming beyond the 1C we have generated already.
In terms of the ferocity of storms, the severity of droughts and floods, wildfires and relentless sea level rise, we ain't seen nothing yet.
And on our current trajectory we will zoom past 1.5C and the Paris Agreement's goal of 2C to something like 3C.
The IPCC's predictions are based on careful appraisal of more than 6000 pieces of peer-reviewed research. Quality control on its report was provided by more than 1000 expert reviewers. They are not making this stuff up.
In light of that, even if the Government were minded to cut taxes — and Finance Minister Grant Robertson was the very picture of fiscal caution on Tuesday — fuel taxes are the last ones they should choose.
Consumers of petrol and diesel, and other fossil fuels, need to get used to the idea that the price of these things will have to keep on rising to the point where we no longer consume any.
The only question is how long it takes for commerce and government between them to deliver the alternatives we need for that to be feasible, and how much planetary damage is inflicted in the meantime.