Prime Minister Jacinda Ardern has all but poured cold water over a suggestion the Government should ease petrol taxes while the price of oil is high and the dollar is low.

Employment and Manufacturers Association (EMA) Chief Executive Kim Campbell said although the Government can't control the price of oil and the Kiwi dollar, it does control how much tax it charges on petrol.

He said high petrol prices are eroding the benefits provided to low-income Kiwis through the Families Package.

"[Ardern] needs to have some flexibility. The one thing the Government can do is adjust the tax on petrol.


"Their [job] is to take care of low-income people – if you want to do that, don't tax the s*** out of them," he said.

But speaking to media this morning, Ardern suggested this was not an option the Government was looking into.

"We have seen an increase [in fuel prices] over the past year of almost 39c and in that period of time excise has been 6.8c of that.

On October 1, excise tax was increased by 3.5c.

"If we remove the 3.5c tomorrow, I cannot guarantee that would be passed onto consumers," Ardern said.

On Monday, she launched a scathing attack on petrol companies, saying consumers were being "fleeced" at the pump.

Today, she defended her strong language saying it was "an expression I used just in utter frustration".

She said there is a "significant proportion" of the petrol price that "cannot be explained".
AA's petrol prices spokesman Mark Stockdale agreed.


"The reality is we don't have all the answers, we don't understand exactly why fuel prices are rising and how much of that is due to fuel companies rising their margins and how much is due to fuel companies' rising profits."

He said there is a "whole lot" that is not fully understood when it comes to how fuel companies calculate their margins.

But petrol companies disagree and have insisted their prices are fair.

"We review our BP Connect prices daily to ensure they're as competitive as possible," BP New Zealand Managing Director Debi Boffa said.

Z Energy and Mobil both said the fuel market is competitive.

Ardern said the Commerce Commission's market study into petrol companies' pricing will help answer the questions about margins.

But ACT Leader David Seymour said Ardern wants to "corrupt" the commission to make it look into the fuel industry.

The Commerce Commission operate independently of the Government.

"There is a balance to be struck between day-to-day politics and preserving New Zealand's institutions," he said.

"The Prime Minister has got that balance wrong here and it's a much bigger issue than petrol prices in the long term."