The oil companies' protestations that it's a competitive market out there are no more convincing now than they have ever been.

The public perception remains that they sell petrol and diesel for what they think they can get away with, those who aren't served by a genuine competitor (Gull, or to a lesser extent independent service stations), subsidising those who are.

Last week BP, Z, Caltex and Mobil generally seemed to have settled on a top price for 91 octane of 225.9 cents per litre. In Whangarei, Z and Mobil were charging 213 cents, Caltex 211 and Gull 209.

'The major complaint, rightly or wrongly, against those who sell petrol is that they are in collusion. And that is illegal. It is difficult to believe otherwise when prices at the pump rise and fall by exactly the same margins at exactly the same moment.'


The oil companies have a huge advantage over other retailers. We can't function without their product, and we can't buy it online. We have no choice but to pay their prices, however inflated they might be.


The purveyors of other products aren't always much better. People in places outside the main centres tend to pay more for everything from chickens to dog biscuits, in the name of cartage. The principle is fair enough, but takes some digesting given the infinitesimal impact an increase in fuel prices must actually have on a truck and trailer load of chickens.

Maximising profits, as the oil companies clearly do, is hardly illegal. Every retailer does that, but the major complaint, rightly or wrongly, against those who sell petrol is that they are in collusion. And that is illegal. It is difficult to believe otherwise when prices at the pump rise and fall by exactly the same margins at exactly the same moment.

One explanation is that they are all raising or lowering their prices as a fair and genuine reflection of their costs. The other is that they are working together to squeeze every possible dollar out of their customers.

We are not entirely powerless, but the one option we have for forcing prices down is unlikely to be exercised. That would be to universally boycott one of the companies. If everyone did that, the boycotted supplier would undoubtedly lower their price, and would be followed by the others.

As painful as current prices might be for the average motorist, politicians will be even more anxious to see prices fall.

Fairly or otherwise, resentment over rising prices will eventually settle on them, not least because of the impact inflation has on the cost of living, which will inevitably affect interest rates and the ability of the economy to grow and provide the government with the revenue it needs to pursue its policies.

The political response so far — an undertaking to demand an explanation from the oil companies for their price increases, and to some lesser degree perhaps regional variations, is almost as galling as the price rises themselves.

Politicians never miss a chance to portray themselves as our friends and defenders, but have long treated service stations as an inexhaustible source of tax. And it's getting worse.

They might not have said it in so many words, yet, but some politicians clearly expect the oil companies to display some sort of social conscience. To sell their product at a price that fairly reflects their costs and a modest profit. Why it would expect that would be a mystery to most, and somewhat disingenuous.

Every time the price of petrol rises, so does the contribution it makes to government revenue. We were told last week that at current levels, the government was collecting $1 from every litre of petrol sold. That's somewhere around 45 per cent, not a bad haul for a government that would have us believe that we are being ripped off.

Few would disagree that we are being ripped off. The question is, by whom? The government is, after all, in the process of adding to its tax take at the service station.

The Auckland Council is about to add another 11.5 cents per litre within its boundaries.

That roughly equates to the increase we saw overnight earlier this month, an increase that politicians clearly suspect wasn't warranted, but which they have no difficulty imposing on their own behalf.

Auckland mayor Phil Goff even has the cheek to expect the Far North to help pay for public transport in his city, and is happy to sock it to city motorists, then spends almost $1 million on a report, which he's not keen on anyone reading, for a $1.5 billion harbourside stadium. Perhaps that money would be better spent on 'No Swimming' signs for when it rains.

And when it comes to doing business with a social conscience, Wellington is in no position to preach to the oil companies. The last National-led government presided over Air New Zealand's decision to stop serving a number of regional centres, including Kaitaia, because they weren't turning a profit.

The current Labour-led government has allowed that practice to continue. And now we're told that the already exorbitant cost of flying within New Zealand is going to increase, because of the cost of fuel.

Try flying from one small town to another and see what you'll be asked to pay, by an airline that is majority-owned by the people of New Zealand. Our national airline has no qualms whatsoever about hoisting fares within the country far beyond any reasonable level to subsidise more popular routes.

It has no social conscience whatsoever, but oil companies, which have no taxpayer shareholding, are expected to display one. Why should they?

The government is right to be investigating the possibility that the oil companies are colluding, but don't expect a result any time soon.

The last government talked about doing something, and so too is the current government, but nothing's going to happen. Those who are charged with protecting us from illegal business practices tend to go for low-hanging fruit, while those who do the real damage get away with it.

In fact the anti-collusion laws are rarely trotted out. Some years ago a motelier somewhere down the line fell foul of them by lowering his winter rates to compete with another motel nearby.

That was judged to be collusion, although there was never any suggestion that the two moteliers had sat down and nutted out a tariff that would enable both to survive. And anyway, since when did lowering prices to match the competition amount to collusion?

Isn't that exactly what we, and the government, would like the oil companies to do now?
Many years ago the price of petrol was standardised. Everyone paid the same, whether they filled up in Awanui, Auckland or Bluff. That, believe it or not, was an initiative of the Kaitaia Chamber of Commerce. But it didn't last.

The free market well and truly holds sway now, the theory being that competition keeps prices down. And so it does, if those who are selling operate in a genuinely competitive market.

The perception now is that the oil companies are behaving as one. Their products are identical, and while there are some exceptions, the great bulk of customers have no ability to shop around, and so exert downward pressure on prices.

The fact is that until fuel prices begin to have a negative effect on the economy, it is in the government's interests for motorists to pay the maximum. Don't believe politicians who say they are pursuing our best interests.

If they were, they would have done something by now, when they are actually more likely to be devising ways and means of taking an even greater share, on our behalf, of course.