More and more I am asked to explain the seemingly irrational fuel pricing in our region.
At this stage I have not had the opportunity to sit with representatives of the fuel companies and get direct insight into just how their pricing policy/equation actually works (meetings are yet to be confirmed).
Obviously, the net result for these companies is to maximise profit per litre, but is it ethical for same to bamboozle us into having no idea as to what the "real" price should be?
Not so long ago, a senior executive (of the then Telecom) by the name of Theresa Gattung was censured for the operation of a similarly confusing pricing regime, with serious consequences.
To date very little pressure has been directed to the management of the oil companies, this seems more than a little unfair. Do we really have to wait another year and spend $1.5 million in taxpayer dollars to get to the bottom of this?
This is how I believe it works:
1. Widely varying pricing is applied across the country. The model takes into account projected litreage throughput per outlet (the companies have already calculated a price based on actual costs, but want more).
2. Their system monitors uptake per gas station and sensitivity to the pricing applied at each point of sale (POS), this allows real-time feedback of what customers at that location are prepared to pay.
3. Variations on "standard" pricing are further entered via discount partners and one day boost programmes (6 cent and 10 cent discount days) which skew normal sales volumes and affect the geo-aspects of normal purchase patterns.
The majority of POS outlets also have a discount available to card holders, (more maths for us to consider when trying to understand what the price actually is!). Regional fuel taxes, although perhaps a necessary evil, have further muddied the waters.
The net result is the desensitisation and deliberate confusing of the Community. Not cricket. These companies are already amongst the most profitable in the World, do they have to resort to this clever fraud? Should they be allowed to?
At the date of publication prices for diesel varied in the region between $1.43/lt in Whangārei to less than $1.24/lt in the Bay of Islands (over the past months the cheapest fuel in the region). Auckland by comparison was sitting at $1.54/lt.
All that is needed is transparency with regard their pricing model ie a genuine window that allows the community to see how these companies arrive at the dollar per litre we are seeing around the country.
This of course sounds like a serious breach of the oil companies' rights under New Zealand law, but we are not talking about the price of a packet of chips here, this is a commodity that has a major impact on every business and household in the country.
We all deserve to know the whole truth.
■ Stephen Smith is the Northland Chamber of Commerce's chief executive.