The public ‘being fleeced’ by petrol companies, duped by Ardern

Following rising petrol prices and rising rhetoric from Simon Bridges and others, Prime Minister Jacinda Ardern has said that she thinks consumers are being fleeced by petrol companies.

She says that the Government is ‘prioritising’ an urgent amendment of the Commerce Amendment Bill – to do market studies that might eventually say something like petrol prices have been higher than the should have been for years.

NZ Herald: ‘Consumers, in my book, are being fleeced’ – PM Jacinda Ardern on petrol prices

National Leader Simon Bridges has been critical of the Government and its fuel taxes which he said is pushing the price of petrol up.

“Unlike petrol, talk is cheap. And the Government is a big part of the reason why petrol prices are so high.”

Petrol prices are creeping up to $2.50 in some parts of the county.

In response:

Prime Minister Jacinda Ardern has launched a scathing attack on fuel companies, telling reporters she thinks “consumers are being fleeced” at the petrol pump.

“I am hugely disappointed in the level of price that consumers are currently paying at the pump for fuel,” she said at her weekly post-cabinet press conference today.

Ardern came out swinging, pointing the finger at fuel importers – such as Z Energy, BP, Mobil and Gull – and their margins.

“Between 2008 and 2017, the margins importers were taking for themselves more than doubled from 7 per cent to 16 per cent.

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

Between October 2017 and September this year, petrol prices have risen 39c – Ardern said just 6.8c of this was tax.

But 9.8c of that was down to the margin from importers, she said.

“I do not see that as acceptable.”

In fact, she said that pre-tax, New Zealand has the highest cost for fuel in the OECD. In 2008, New Zealand had some of the lowest.

Given the concerns about “anti-competitive behavior” in the fuel market, the Government has prioritised the passing of the Commerce Amendment Bill.

This bill would amend the Commerce Act to enable the Commission to undertake market studies.

Once the bill is passed, Energy Minister Woods has signalled that she intends to ask the Minister of Commerce and Consumer Affairs Kris Faafoi to request the commission to conduct a market study into fuel markets to better understand how the market is functioning.

Ardern is anticipating the bill to be passed in two weeks’ time.

The study will report back next year, and the Government will prioritise a response to what the Commerce Commission finds.

So an urgent amendment to initiate a study that will report back some time next year.

Another bloody Government inquiry on something they say is a priority requiring urgency. We have been paying increasing petrol prices for how long?

Bridges said the Government should axe its fuel tax increases to provide immediate relief to motorists.

“[Ardern] is saying consumers are being ‘fleeced’ while her Government is driving up fuel prices and taking hundreds of dollars from Kiwi households through higher taxes on fuel.

“The [Commerce Commission] inquiry will take months and any resulting changes could be years away. Meanwhile New Zealanders are paying record prices for petrol and the Government is collecting hundreds of millions of extra tax [dollars] from them.”

We are reminded of petrol prices whenever we fill up our vehicles, so this could be an effective line of attack from the Opposition.

Hamish Rutherford (Stuff): If the Government is so certain motorists are being fleeced, what is it waiting for?

Prime Minister Jacinda Ardern is convinced that Kiwis are being “fleeced” when they pay for petrol.

“As a moral stance, I think New Zealanders are paying too much,” Ardern said.

With motorists paying close to $2.50 a litre for petrol in many parts of the country, it is understandable that the issue is back in the headlines, and that the Government wants to be seen to be taking action.

The problem is, the action being taken is to ask the Commerce Commission – effectively the referee on whether consumers are being ripped off – to investigate. These studies tend to take around a year.

If Ardern is already convinced that a rort is taking place and Energy Minister Megan Woods believes the market is “broken” as she said in May, why are they bothering to investigate?

This has been an issue for years – and that means under the last Government as well.

Simon Bridges also criticised Ardern for announcing “yet another inquiry”, when for years National failed to give the Commerce Commission the teeth it needed to investigate a market it also believed was flawed.

Had it acted earlier, we may be closer to a definitive answer.

But the Government’s urgency has a rich irony. Ardern has described climate change as New Zealand’s “nuclear free moment”.

Her Government seen fit to crack down on the oil exploration industry, ending new offshore permits, purportedly as a means to take action.

But the reason the climate is warming is not because fossil fuels are being extracted, it is because people are burning them.

If Ardern was really serious about tackling the issue, surely she would do something about demand.

But that is a probably subject to some sort of ongoing process or inquiry too.

Ardern is fiddling while petrol prices keep burning consumers in their wallets and purses.

Petrol price rip off

A report from the Government suggests that we are being ripped off with petrol prices, especially in Wellington and the South Island.

Judith Collins:

Fuel Market Study released

A study into New Zealand’s retail fuel market confirms that it has features which may not be consistent with a workably competitive market, Energy and Resources Minister Judith Collins says.

The Study found that retail fuel margins have increased significantly over the last five years while fuel margins for aviation and commercial road users have been flat or falling. It also found that higher petrol prices in the South Island and Wellington are not explained by higher costs in those areas.

“There were difficulties in comparing the information received from the companies, and some very specific information that was required could not be obtained.

“As a result, the Study doesn’t definitively answer whether fuel prices are reasonable or not. However, the Report does conclude that “we cannot definitely say that fuel prices in New Zealand are reasonable, but we have reason to believe that they might not be.”

“This is a very complex area and the Study takes us a significant step forward in our understanding. I have now instructed my officials to assess the recommendations of the Study and report back to me by November.

“Furthermore, the Market Studies powers announced recently by the Minister of Commerce and Consumer Affairs will give the Government the option to direct the Commerce Commission to undertake a further competition-specific fuel market study, backed by the ability to require comparable data across companies. There is currently no legal mechanism to do this.”

“I would like to thank Z Energy, BP, Mobil and Gull for taking part in the Study.”

The Fuel Market Financial Performance Study, MBIE summary of the Study and the Cabinet paper are available here.

Collusion between fuel companies or lack of real competition?

Petrol pricing is complicated, probably deliberately, by fuel card and coupon discounts, that mask the real retail prices, and really rip you off if you need to get petrol from a service station that you can get a discount from.