Mike Hosking: Who's really fleecing you at the petrol pump?

Mike's Minute: Who's really fleecing us at the pump? The Government.

COMMENT

The Government's delusion over the scandalous operating methods of the petrol industry rolls into another year.

Having got it's Commerce Commission report, it has responded with a bit of potential law and a threat.

The law is looking to be passed later this year, so no hurry then. And the threat? If there isn't more competition opened up, it will set the margins.

It won't, of course. Governments don't set margins for retail products. If they did, we could all move to Cuba, and you'll also be expecting them to work out the profit margin on a 2 litre tub of Tip Top ice cream and tell you whether you're getting fleeced on it or not.

The claim, post the Commerce Commission report, was that petrol could come down 32 cents a litre.

If you believe that, you believe the Government is also solving child poverty.

Basically, the plan is to have the companies show what they buy and sell petrol to each other for. They also have to show what premium petrol is sold for. They already do this of course - it's on the pump.

So how a bigger sign elsewhere is going to help? I have no idea. It certainly isn't going to make it cheaper.

Then we come to the complexity of fuel pricing, the refining costs, the transport costs, the margins, the number of stations, the number of stations with promotions, the value of the dollar, the price of a barrel. This and a myriad other things are constantly at play and constantly being juggled, to produce the price of a litre.

Try taking the Government's slice out of the cost of a tank of petrol and see what you're left with. Photo / Jason Oxenham

On any given day, at any given station, in any given town, you have large variance and the variance is based on the variances of the market and its conditions.

To say you will have cheaper fuel is to completely fail to understand how the industry works.

Are there stations with large margins? Of course. The same way some products in some shops make small fortunes on certain items, and little if anything on other products.

When you get 50 per cent off in a sale, you think you're winning. But the shop is still making money and/or the original price was never 50 per cent more. This happens in retail everywhere.

Petrol is just a retail product, but because it's a grudge purchase it's become a political football, the likes of which the naive - read, our Prime Minister - wade into thinking they can change.

She can't build houses, can't solve poverty and certainly can't promise cheap fuel.

The ultimate irony, of course, is the great profit. The biggest fleece in petrol, is the tax.

You want to see a rort? Look at the price of any litre, anywhere you want, and take out the Government's slice, and see how cheap it is then.

Mike Hosking. File photo / Michael Craig

We don't hold the Government to account on its raiding of our pockets anywhere near as much as we should.

Oil companies are easy targets because they're big and foreign. Does the market work perfectly? Probably not. But then most markets don't. Supermarkets, insurance, medicine - there are lots of places to look if you love a conspiracy or cheap political points.

But when its 32 cents cheaper because the Government made it so, call me.

Guess what? I'm not expecting you to.