Probe into rising petrol margins on cards, suggests Energy Minister Judith Collins

Energy Minister Judith Collins says she is concerned if petrol margins continue to rise "when there seems little justification for it". Photo / File

Energy Minister Judith Collins has signalled there could be announcement made next week about an inquiry into rising petrol margins.

The Automobile Association today called for fuel companies to explain to motorists why the national price of fuel rose 5 cents per litre during January, despite no increase in commodity prices or a drop in the exchange rate.

Collins, who became Energy Minister at the end of 2016, said she was "disappointed" fuel margins were going up.

"Ensuring a competitive market is the best way to keep fuel costs down.

"I am watching this issue very closely and will be discussing it with Ministry of Business, Innovation and Employment officials today.

"I expect to make further announcements next week."

AA spokesman Mark Stockdale said the rise in fuel costs was "most unusual".

​"Normally retail prices rise following an increase in the cost of importing fuel, but that wasn't the case in January.

"While commodity prices did rise in December, they have since fallen slightly while the New Zealand dollar has strengthened by over 3c. If anything, the retail price should have fallen, not risen by 5c."

Some service stations - typically North Island stations where Australian cheap fuel retailer Gull operated - had been substantially discounting fuel, selling it for under $1.70 a litre.

"At those prices, the service stations are selling it at or below cost. The AA suspects the rise in the national price - excluding any discount - is to help cover the cost of selling fuel at substantially lower prices elsewhere, and we'd like the fuel companies to confirm that."

AA members were very confused by the large range of pricing, Stockdale said.
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"The AA believes the current high margins, and the unexpected January price rises, warrant further investigation.

"The last time fuel company margins came close to the current level, the Government put the fuel companies on notice and asked them to justify the high margins.

BP spokeswoman Shelley Brady said there had in fact been some increases in costs.

"While we have received some relief from a stronger Kiwi dollar recently, we have still seen some increases in refined product costs...

"Like many other retail businesses, we will independently change our prices when and where we can to ensure competitiveness in the markets in which we operate.

"As a result, prices can differ all around the country on different days and at different times, but we cannot always undertake or sustain heavy localised discounting."

Meanwhile, Z Energy spokesman Jonathan Hill said Z's margins weren't increasing.

"Z's net profit after tax on a cent per litre basis is just over 4c per litre and our cent per litre profit is flat...

"We appreciate with all of the discounting in the market it can be really confusing for customers but this is just the way competition is playing out.

"If [Collins] is thinking about a review or independent study into margins and profitability we would welcome that for the clarity it would provide."