Government prepares to battle soaring fuel prices in wake of blistering new report that says Kiwis overpaying at the pump

The Government is preparing to take on fuel companies over soaring petrol prices in the wake of a blistering new report.

However cash-strapped motorists will not get any immediate relief at the pumps.  

The Minister of Energy and Resources says fuel isn't delivering 'fair and competitive prices'. Source: 1 NEWS

Business ministry officials today published a report that says Kiwis are paying too much for petrol and diesel – and those increased costs can't be explained. 

Over the last decade New Zealand has gone from having some of the lowest pre-tax fuel prices in the developed world to the highest.

The government is stepping in to stop motorists being ripped off. Source: 1 NEWS

Energy Minister Megan Woods said: "MBIE [Ministry of Business, Innovation and Employment] notes that the rise in margins since 2008 represents a transfer of wealth from consumers to producers to the tune of hundreds of millions of dollars."

So the Government has now asked MBIE to investigate ways to use legislation to intervene in the market. 

They will not go so far as to set prices at the pump or nationalise fuel companies, but will look at how Parliament can make the market much more competitive and make it easier for new companies to emerge.

After almost five years of consumer concern, it is the strongest signal the Government has sent to fuel companies about their behaviour, but the options for direct intervention will remain secret – those sections of the report are blanked out.

Commerce and Consumer Affairs Minister Kris Faafoi has also asked officials to fast-track work that will allow the Commerce Commission to investigate.

The new power would compel companies to provide information to the Commission to fully understand how markets are functioning. But it is not a quick fix as the beefed up powers will not be in place until 2018.

Kiwis motorists spent on average $1500 on petrol in 2016 – that is $150 more a year than in 2008.

At the heart of concerns are margins – the difference between the cost of importing petrol and the price you pay at the pump.

MBIE produced a report earlier this year which said a significant increase in retail margins - and higher prices paid by motorists in Wellington and the South Island - could not easily be explained. 

The margins for fuel not sold to the public – for example for trucking or for aviation – were flat or declining and fuel companies costs had not increased.

MBIE officials could not get to the bottom of the discrepancy because some fuel companies refused to hand over crucial information.

The Government asked MBIE officials to produce a second report and make some recommendations based on their findings.

MBIE ruled out a liquid wholesale market for petrol and diesel – similar to the electricity market – saying it would not work here.

A long awaited reported into petrol pricing will be released by Energy Minister Dr Megan Woods today. Source: Breakfast