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Home / New Zealand

Petrol companies criticised over pricing

By Nicki Harper
Hawkes Bay Today·
29 Dec, 2016 07:30 PM4 mins to read

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Gull Petrol, Regular 91, 1.81 at self-service station, Karamu Rd, Hastings. Photo / Duncan Brown

Gull Petrol, Regular 91, 1.81 at self-service station, Karamu Rd, Hastings. Photo / Duncan Brown

Rising petrol prices over the last three months have prompted criticism of petrol companies over the upward pricing trend and their increased margins.

The Automobile Association is calling a 3c petrol rise on December 14 unnecessary and that it expects a price cut if the exchange rate or commodity prices move favourably.

The increase has pushed margins on both petrol and diesel to the highest point in years, according to official Ministry of Business Innovation and Employment (MBIE) statistics.

Fuel prices have bumped up significantly from September when, around the Hawke's Bay region, they ranged from $1.507 a litre for 91 Octane to $1.699 a litre.

This week all companies were fairly comparable around Hastings and Napier, with Octane 91 at $1.849 per litre at Caltex in Karamu Road, the same at BP in Clive and Caltex and Mobil in Napier.

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Gull in Napier was $1.847, but BP in Waipawa was higher at $1.879.

The pain being felt at the pump prompted Labour's Energy Spokesman Stuart Nash to, this week, call out the country's petrol companies over their pricing behaviour.

"Two years ago when margins were high I personally asked the powerful parliamentary Finance and Expenditure select committee (FEC) to undertake an investigation into pricing, and we decided that if margins reached such levels again we would initiate a investigation.

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"Well, both importer and retailer margins have continued to increase for petrol and diesel so now it is time for action.

"The MBIE information shows that margins are more than double what they were 10 years ago and that we pay the highest out of every OECD country for our petrol before taxes. The only losers are good hard working Kiwis and the only winners are big oil companies.

"This type of monopolistic behaviour is exactly what the Commerce Commission was concerned about when Z Energy took over Caltex NZ and gained over 50 per cent of the retail market," he said.

Z Energy spokesperson Jonathan Hill said that of 1500 stations nationwide, Z had about 200, two-thirds of which were owned and operated by mums and dads, and that there was sufficient competition in the market, especially in Hawke's Bay.

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"Hawke's Bay has been one of those regions where there is particularly strong price competition and our prices are discounted heavily off the national price to match the market."

He said that about 20 years ago there were 3000 stations around the country, which made the margins on fuel unsustainable, but in the last few years they had improved, but were still not huge.

"Our net profit margin on a litre of fuel is 5.5c per litre, it's still a tight, competitive industry."

Without these margins, owner operators would find it difficult to re-invest in their business, he said.

He added that the Commerce Commission approved Z's purchase of Caltex, and that Z does not operate or control the Caltex branded retail service station network, which was independently owned and operated, with Z supplying fuel via a wholesale supply contract while the independent operators set their own prices.

"Z believes the level of competition has never been stronger. There are currently approximately 16 retail brands competing in the market, with a range of independent operators investing significantly in new operations and the future of their businesses."

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Mr Nash urged the new energy Minister, Judith Collins, to support an official FEC investigation into petrol and diesel margins in order to get to the bottom of the pricing regime.

"The last minister wrote a letter to the companies involved stating he was watching their pricing strategies closely: this minister is much more a person of action and I am prepared to work closely with her in the best interests of Kiwis."

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