31 Jan 2017

Widening petrol price margins hurting motorists - AA

9:09 am on 31 January 2017

Petrol price margins are widening, sparking calls for the government to investigate whether motorists are being ripped off.

no caption

Wellington petrol was found to be 46 cents a litre dearer than in Rotorua, according to a blogger who tracks petrol prices. Photo: 123rf.com

Wellington-based Greg Holden noticed how cheap petrol was in Masterton when travelling to Hawke's Bay with his family on holiday.

"As we headed out of Wellington it was pretty clear the price of petrol dropped as soon as you closed the Rimutakas," Mr Holden said.

"So it struck me as why is petrol cheaper in small town Wairarapa than it is, say, in Wellington?"

One blogger, who tracked prices at stations between Whakatane and Wellington, found the capital city, at 208.9 cents a litre, was 32 cents more expensive than Levin, and a whopping 46 cents dearer than Rotorua.

Greg Holden said even the 20 cent difference he noticed made a big difference.

"For the average Wellingtonian filling the tank, they're paying a tenner extra than ... the rest of the country."

AA petrol watch spokesperson Mark Stockdale said competition, or the lack of it, in places like Wellington, was to blame.

He believed motorists in the South Island and Wellington were paying more to fund the price wars taking place in the rest of the North Island, where Gull was offering keener deals and forcing the major petrol sellers - Z Energy, BP and Mobil - to compete hard.

Mr Stockdale said it also meant the margin between the cost of fuel and what the fuel retailers were charging was fatter than ever.

"The margins have crept up.

"In fact, the last time margins reached the level they have now, we actually had the Minister of Energy [Simon Bridges, in 2015] actually call the fuel companies out and say he was very uncomfortable with the margin and was putting them on notice."

20072016 Photo: Rebekah Parsons-King. Smart Motorway in Wellington.

Motorists in Wellington and the South Island are likely to keep missing out on cheap fuel due to a lack of competition. Photo: RNZ / Rebekah Parsons-King

Figures reported by the Ministry of Business, Innovation and Employment show petrol retailer margins have trended higher over the last five years, including a 2 cent jump to 30.54 cents a litre in 2016 alone.

The fuel retailers deny motorists are being ripped off.

Z Energy CEO Mike Bennetts

Mike Bennetts said he didn't consider Z Energy's profit "unreasonable or outrageous". Photo: RNZ / Alexander Robertson

Z Energy chief executive Mike Bennetts said the ministry's figures didn't capture all the prices out there - ranging from discounts on loyalty programmes and apps to site-specific or regional offers.

Mr Bennetts said Z Energy had an overall post-tax profit of about 5 cents per litre.

"About a third of that relates to all of the stuff we sell through our convenience stores. So you could say 3.5 cents per litre is the sort of profit for Z made from selling fuel across all the geographies and markets we have in New Zealand.

"I don't consider that to be unreasonable or outrageous."

Mr Stockdale admitted petrol pricing was complex, but said the problem was a lack of transparency.

He said he would like the new Energy Minister, Judith Collins, to investigate what was behind the rising margins.

"Unfortunately [the margins] have gone back over that comfort level. Maybe the new Minister of Energy also needs to be calling the fuel companies out."

Speaking to Morning Report, Labour's energy spokesperson Stuart Nash said someone was making a profit and called for a select committee inquiry into the matter.

"Petrol is a huge cost to the household and if we are getting ripped off then we need to do something about it."

Any select committee investigation should be bipartisan, Mr Nash said.

"Don't make it a government one, don't make it an opposition one, but let MPs work together to find out what's going on here."

A spokesperson for Ms Collins said the minister would discuss it further with officials over the next couple of weeks.

But analysts say an investigation will not be a substitute for real competition.

And on that score, motorists in Wellington and the South Island are likely to miss out.

Gull has downplayed the option of expanding its footprint south of Masterton and Levin, which would force it to invest in expensive terminals and compete in the market that accounts for only a third of the overall fuel market.

Get the new RNZ app

for ad-free news and current affairs