Fuel companies quick to hike prices, slow to drop them - Commerce Commission

By RNZ

A delay in dropping petrol prices is costing motorists $15 million a year at the pump.

The Commerce Commission’s analysis of fuel monitoring data shows retailers are quick to put prices up in response to increased costs, but slow when it comes to bringing prices down when oil prices fall or the exchange rate changes.

Commissioner Bryan Chapple said motorists often pay more for petrol longer than they should.

“We can see clear evidence showing that fuel companies maintain temporarily higher margins after a decrease in their costs, lasting up to two weeks - at great expense to Kiwi motorists.

“Our findings suggest that petrol prices shoot up at the pump in response to increased costs, but there is a noticeable lag in retail prices being lowered in response to decreases in underlying costs.”

He said the commission will be keeping a close watch on pricing tactics, particularly around the Auckland region, before and after the regional fuel tax is removed on June 30.

The cost of fuel delivered to the Auckland region from July 1 will drop by 11.5 cents per litre.

“If fuel companies don’t reflect this drop promptly in retail prices, Aucklanders could be over-paying by nearly $1m in the first week alone,” Chapple said.

“In a healthy and competitive fuel market, we expect to see changes in underlying costs fully passed through into retail prices promptly.”