'Why are margins as high as they are?' Blistering report finds Kiwis overcharged hundreds of millions at the fuel pump

A blistering new report has found Kiwis are being overcharged at the pump by hundreds of millions of dollars, and the AA says fuel companies need to be more transparent about the reasons behind the price hike.

Responding to the report, the Government has signaled they may be forced to intervene - but how this would be practically enacted is very unclear.

AA spokesman Mark Stockdale said the report identifies a need for fuel companies to be far more transparent on the business costs that have led to New Zealand going over the last decade from having some of the lowest pre-tax fuel prices in the developed world to the highest.

Yet, Mr Stockdale says the suggestion the rise is all just greedy profit widening is not necessarily the case.

“It’s really hard to say," he told TVNZ 1's Breakfast.

"What motorists want is an explanation why margins are as high as they are and why they’ve risen so substantially in the last nine years,” Mr Stockdale said.

"Is it all just about profit, and that’s probably not the case, it appears not to be the case, and if it’s about just increases in cost, what are driving those cost increases?"

Mr Stockdale says the AA has been calling for fuel companies to be more upfront with motorists to explain why their margins are rising and why prices vary so substantially across the country - sometimes varying up to 30 cents per litre.

Motorists in Wellington and the South Island have generally been paying substantially more for fuel than much of the North Island.

Mr Stockdale the reasons for this is likely due to higher competition between fuel companies

“Once upon a time it probably did but now the retail price at the pump you pay doesn’t really have a lot to do with costs like transporting the fuel. It has a lot to do with competition and the presence of low cost brands,” Mr Stockdale said.

Mr Stockdale said the AA recommends a detailed market study by the Commerce Commission, to offer some recommendations on how the fuel companies can be influenced.

However, this will require a change to the Commerce Act, which would be at least a year off.