Rising petrol prices cost drivers hundreds of millions a year
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New Zealand fuel prices have soared from among the lowest in the OECD to the highest, according to a new report.
And Energy and Resources Minister Megan Woods is sending a stern message to fuel companies, warning the Government may intervene if it believes the industry is ripping off motorists at the fuel pump.
The Commerce Commission may be able to investigate collusion among petrol companies after the report showed a massive swing in fuel prices in the past decade, transferring hundreds of millions of dollars a year from motorists to petrol companies.
The Ministry of Business, Innovation and Employment's report on fuel prices said it had "reason to believe" the market was not fully competitive and that fuel prices were unreasonable.
It said that since 2008, New Zealand pre-tax premium petrol prices had soared from the "bottom third of OECD countries" to become the "most expensive". The swing amounted to a "wealth transfer from consumers to producers, increasing the effective living costs of motorists".
At the same time fuel prices were rising faster in Wellington and the South Island compared to the rest of the North Island.
Fuel prices are at their highest in three years, hitting 214.9c per litre for unleaded in central Wellington.
"Based on MBie data, retail petrol margins have increased by over 18 cents per litre between 2008 and 2017, equating to an additional cost per motorist of close to $150 per annum over that period," the report said.
An extra 1c a litre for petrol costs drivers about $32 million a year, the report estimates.
"This means that the potential wealth transfer from consumers to fuel suppliers since 2008 is likely measured in the hundreds of millions of dollars per annum."
The report is an update on a report released in July under former minister and National MP Judith Collins, who had raised the issue of giving the Commerce Commission more powers.
Collins said the initial report was stymied because Mobil and Gull refused to provide the requested market information, which Z and BP did provide.
Minister of Commerce and Consumer Affairs Kris Faafoi has now asked officials to fast-track work to empower the Commerce Commission to investigate collusion without evidence, and force companies to provide information on how the market functions.
He said he wanted the commission to have the powers, which meant changing the Commerce Act, by the end of next year.
"The Commerce Commission also needs to be able to self-initiate these studies where they see that markets are not doing a good job for New Zealanders. Having thorough information and shining a light on a market enables us then as Government to decide if we need to take any action," Faafoi said.
In the meantime, Woods has asked MBie to continue monitoring the market and to make regulatory recommendations to improve competition, such as by encouraging other players in the market.