Major oil companies cannot guarantee fuel prices at the pumps will not rise once Refining NZ converts the business into an import-only terminal in a few months.
Mobil, BP, and Z Energy have entered into a three-year terminal agreement with Channel Infrastructure (CI), the new company to replace Refining NZ from April next year, to import refined fuel and on sell it throughout New Zealand.
The same companies, which collectively own 42.53 per cent or 133.3 million shares in Refining NZ, also have similar agreements with the refinery at present.
After the three-year term, CI can bring in new customers and Gull has signalled it may wish to import refined fuel provided the terms and conditions were viable.
Refining NZ shareholders and its board have voted overwhelmingly to convert the business from a refinery into an import-only fuel terminal due to a glut of fuel supplies globally, combined with the impact of Covid-19 on refinery output, pipeline fees and plummeting demand for fuel.
Company chief executive Naomi James said oil companies determined fuel prices at the pumps as they were the ones that brought fuel into the country.
A spokesman for BP said there were a number of factors that influenced prices which were reviewed daily to ensure competitiveness in the market.
He said about 30 per cent of their fuel supply was already imported as a finished product.
BP has a dedicated local supply team and was an expert in a reliably sourcing quality product from international refineries and terminals, the spokesman said.
Z Energy said to discuss future pricing would be considered price signalling under Commerce Commission rules.
"Z believes the shift to an import only terminal model will benefit New Zealand as we source refined product from larger and more efficient overseas refineries while ensuring flexibility and reliability of supply for our customers," spokesman Matt Hardwick said.
He said Z was in the final stages of negotiations with several potential suppliers who were either refiner-marketers of petroleum products or trading houses that could supply product to Z from multiple regional refineries.
The refined fuel being imported, he said, was just one element of the overall cost, in addition to excise tax and regional fuel taxes along with foreign exchange rates, freight and other operating costs.
Mobil did not respond by edition time.
Gull general manager Dave Bodger said Refining NZ's decision to lock in the three major oil companies didn't come as a surprise.
"They've had a monopoly for 30-odd years so we were expecting it to be a closed club. That's how refineries act. We'll look at our options after three years but it's got to be viable."
Bodger said Gull has been importing refined fuel primarily from Asian refineries for 23 years and trucking it out of Mt Maunganui to the whole of North Island.
Unlike the major oil companies, lower costs from unmanned fuel outlets has enabled the likes of Gull, Allied, and Waitomo to offer cheaper fuel throughout the country.
Waitomo managing director Jimmy Ormsby is predicting fuel prices to come down from April next year, given the complexities of refining crude oil would be removed.
Once the three-year term of the major oil companies expired, he said smaller fuel suppliers would be able to compete in terms of importing refined oil.
Ormsby said had the refinery continued on the current path, smaller fuel suppliers would not have been able to compete with the likes of Z, Mobil, and BP.
Waitomo buys fuel from Mobil.
Fuel taxes are made up of 70.024 cents per litre that goes to the National Land Transport Fund, 6.0 cpl in ACC levy, 0.66 cpl local Authorities Fuel Tax, 0.6 cpl Petroleum or Engine Fuel Monitoring Levy, and 15 cpl Emissions Trading Scheme Levy.
GST of 15 per cent is added on top.
As an example, a retailer selling 91 petrol at $2.64 a litre will pay 48 per cent or $1.27 in taxes on fuel in all the regions, except Auckland where motorists pay a separate regional fuel tax of 10 cents for every litre.
The pump price of diesel is made up differently to petrol. There is no excise tax on diesel; vehicle owners pay annual road user charges instead