Jacinda Ardern 'hugely concerned' at petrol prices, Government to force fuel companies to open their books

Source: 1News

The Government's going to force the fuel industry to cooperate with a study of the market, with the Prime Minister saying she's "hugely concerned" at the prices consumers are currently paying at the pump and calling petrol margins unacceptable.

Jacinda Ardern told reporters at her post-Cabinet news conference petrol is an unavoidable cost for many and while the international price of crude oil has risen almost 30 per cent just this year, that doesn't tell the full picture of what is going on in New Zealand.

She said given the concerns about anti-competitive behaviour in the fuel market the Government is prioritising the passing of the Commerce Amendment Bill when the House resumes next week and she expects all stages to be passed by the second sitting week. 

"This bill will create the ability to undertake market studies and will compel companies to produce information to the Commerce Commission to fully understand how markets are functioning," Ms Ardern said.

The last Government tried tries to undertake such a review but struggled to get the cooperation of the fuel industry, she said.

"That is why we are passing legislation that will allow us to undertake a full market study and will require their cooperation."

She said prices had risen 39 cents in the past year, and the Government's fuel excise is only a small part of that. 

She said she expects the market study to report back next year "and we will priorities a response to it".

Ms Ardern said that in 2008 we had one of the lowest pre-tax costs for fuel in the OECD but today New Zealand has the highest pre tax cost for fuel among developed countries.

Between 2008 and 2017 the margins importers were taking for themselves more than doubled from seven per cent to 16 per cent, she said. 

"That increase represents a transfer of wealth from petrol consumers to producers to the tune of hundreds of millions of dollars a year.

"Between 27 October 2017 and 28 September 2018, petrol prices have risen roughly 39 cents, of which 6.8 cents at that point could be attributed to taxes and levies, 22 cents roughly to importer costs and 9.8 cents to importer margins. I do no see that as acceptable," the Prime Minister said.

She said there are also different fuel prices between the South Island and Wellington, versus the rest of the North Island and while there might be a slightly higher cost in transportation in the South Island "it is no way near equivalent to the difference in fuel prices now". 

Ms Ardern said prior to 2015 prices were reasonably similar around the country but by 2017 average gross margins in the South island and Wellington have grown to almost 10 cents versus the rest of the North Island.