Energy Minister Simon Bridges says big petrol retailers are "on notice" after they maintained large profit margins while the price of oil was falling sharply late last year.

Mr Bridges warned the New Zealand branches of Chevron, Mobil, Z Energy, BP and Gull in a formal letter.

He expressed his disappointment at their slowness to adjust prices at the pump when the cost of crude oil was plummeting.

He wrote: "I accept that the rapid fall in importer costs was unusual, but I consider the corresponding retail price adjustments were slow and margin levels too high for too long."

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He said the lag in dropping prices at the pump did not "indicate an entirely vibrant competitive market".

At the time, the retailers were making an average profit of up to 55c per litre, compared to the average profit margin of 42c per litre over 2013. Their margins have since returned to an average of 45c.

Mr Bridges conceded fuel prices began falling again before he sent the letter, on February 3, but said retailers were "on notice" and he had "made it very clear" that he was "watching them".

If retailers did not react more quickly in future, he would "assess his options". He did not say what those options were.

Chevron New Zealand spokesman Jeremy Clarke said the company reviewed its prices daily, and "we base our pricing on the competitive environment in which we operate, and the cost involved at that time".

Mobil spokeswoman Samantha Potts said many factors, including the price of crude oil and exchange rates, influenced fuel prices.

"Over the past few months the falling crude oil price has flowed through to regional product prices and resulted in significant drops in local prices at New Zealand retail sites," Ms Potts said.

Z Energy chief Mike Bennetts said once all costs were taken into account, his company's net profits in the last financial year were 4.2c per litre.

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BP spokesman Jonty Mills said the company had not changed its pricing models as a result of Mr Bridges' letter.

"One of the things we've gone to him [Mr Bridges] and said is that the evidence shows ... that prices move up and down consistently in relation to the cost of the product on the international market."

Gull general manager David Bodger applauded Mr Bridges' letter: "A lot of our opposition are charging, on average, 10c a litre more in areas where we're not [located]."