A lack of competition between petrol companies could be contributing to the high petrol prices Kiwis pay at the pump, according a draft report released this morning by the Commerce Commission.
"The fuel market is not as competitive as it could be," commission chair Anna Rawlings said.
"For many families and businesses, fuel is a significant weekly expense and there has been public concern for some time that pump prices may be higher than they should be."
The Commerce Commission's draft report found a range of issues, including:
- New Zealand's pre-tax petrol and diesel prices were among the highest in the OECD
- Many fuel companies were highly profitable
- Discounting was a "poor substitute" for price competition
Prime Minister Jacinda Ardern said the Government's "instinct" prior to the report was that New Zealanders were paying too much at the pump.
"Now we have the Commerce Commission essentially confirming that that is what is happening in New Zealand.
"Over the last decade we have seen those returns climb. I can tell New Zealanders we cannot stand by while they are facing that pressure at the pump and while they are being fleeced."
"It's not right, it's been happening over the last decade."
She said revenue companies were making was almost double that of international comparisons, there had been "significant" fluctuations on prices for New Zealanders, and location had a large impact of how much a motorist would pay.
Ms Ardern said the Commerce Commission would release its final report in December, and the Government would be ready to act on the commission's recommendations.
"We just want final confirmation that what we do is going to make a difference for New Zealanders of the pump."
She moved away from calls to reduce tax on fuel, saying it did not explain what was happening in the New Zealand market.
National's Simon Bridges said he agreed New Zealanders were being fleeced, but said "the biggest fleecer isn't the petrol companies, it's Jacinda Ardern and her Government".
"Jacinda Ardern is the fleecer-in-chief with all of the taxes piled on," he said.
"You're not going to make up for all these taxes with tinkering and talking around the edges. Talk is cheap, petrol taxes aren't."
The Government increased the petrol excise duty by 3.5 cents per litre in September 2018, and additional 3.5-cent increases were set for 2019 and 2020.
National introduced six excise taxes on fuel between 2008 and 2017, raising the price 17 cents.
In today's draft report, fuel in the regions took a hit, with South Island fuel from major outlets linked to weaker competition and higher prices.
The core problems outlined in the report included that "an active wholesale market for fuel does not exist in New Zealand"; major companies have joint infrastructure networks and supply relationships that give them an advantage over potential rivals; and any new importer faces "significant challenges".
Wholesale prices appeared higher than a competitive market and that flowed through to retail pricing.
The investigation found companies such as Gull and other small retailers "had a positive, but limited impact on retail prices".
It recommended boosting competition by making greater contractual freedoms so resellers could switch between suppliers and enable wider participation in the joint infrastructure.
"The options we are considering in the wholesale market are not quick fixes, but may help to open up the market and improve competition over time," Ms Rawlings said. "We particularly want to test their feasibility with fuel companies and other experts, and gauge whether there may be other options that could help competition."
The retail fuel investigation was launched in December, to look into the competition in the fuel industry after importer margins more than doubled over the past decade.
In May 2018, Energy Minister Megan Woods said petrol price hikes at the time were "exactly why we're pushing ahead to get the market study powers" - meaning companies would be made to provide information to enable the regulator to have a greater understanding of the fuel market.