Podcast: The Detail

Who’s putting the pain in our gas tanks?

The Detail today looks at the Commerce Commission's report on petrol companies to see who's really to blame for the soaring cost of petrol.

If you’ve stood at a petrol station fuming, watching the numbers climb as you fill up your tank, you may have been looking for someone to blame.

New Zealand motorists pay whopping taxes on fuel – almost half of the price is in various levies and taxes, and then GST goes on top.

But this week, the Commerce Commission shone a light on the part petrol companies play.

RNZ business reporter, Kim Savage, says the commission is concerned about three main areas the sector is falling short on - high margins, high returns on investment and lack of competition.

Savage says the difference between the cost of importing the fuel and the price you pay at the pump has doubled across the industry in the last 11 years.

The commission also found fuel companies’ return on investment was more than it expected it to be.

And competition-wise; it’s very hard to enter the market.

Companies which offer cheaper petrol would change the nature of the market.

Savage says, “this is referred to as the ‘Gull effect’; Gull being a budget, unmanned operator coming into markets.

“In Wellington, we haven’t had Gull and of course Wellington has been identified as one of those places having higher prices.”

The commission also found the discounts offered on petrol - the ones on the back of our supermarket receipts - aren’t a good enough substitute for the prices on the board.

Savage says all eyes are now on the industry to make changes.

The Commerce Commission “would expect the industry to come up with ideas with more transparency on what the promotions are and what’s on offer for customers.”

The government can also make changes to regulations based on the final recommendations from the commission which are expected at the end of the year.

Savage says the price hikes shouldn’t have come as a surprise.

In 1988 the sector was de-regulated and BP, Mobil and Z energy entered the retail market.

Z Energy, stated its intention of wanting to increase the margins; to make the market more appealing to enter.

Want more from The Detail? Find past episodes here.

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