Z Energy and Gull are calling for terminal gate pricing after the Commerce Commission said competition should be greater and fuel could be cheaper for consumers in New Zealand in its draft market study report yesterday.
"A terminal gate price sends the right commercial signals to everyone in the market for people who want to invest in infrastructure and make sure that capacity is available, for anybody who wants to grow their business or for a company like Z to be able to compete more vigorously against our current competition," Z Energy chief executive Mike Bennetts said.
"We believe the terminal gate price mechanism is the simplest way forward… it’s just more competition, a relatively simple way of doing it compared to others," Gull general manager Dave Bodger said.
Terminal gate pricing sees operators sell fuel to companies for a set wholesale price that’s publicised online.
In Australia, the scheme is touted for being transparent for companies to compare before buying fuel and is backed up with state and federal regulation.
“That’s part of making sure they are not doing deals with suppliers that reduce competition so making the price transparent can help competition,” New Zealand Institute of Economic Research Peter Wilson said.
Mr Wilson said the move would be positive for the market but does have implications.
“It's something that's going to raise a number of questions ... what sort of precedent does it set for other markets and particularly for the fuel companies.
“The Government will be telling them that they have to sell their product to their direct competitors and that's something we need to think about very carefully,” he said.
The Commerce Commission noted in its report prices may drop in the South Island if Timaru Oil Services Limited enters the area successfully when its terminal opens next year.
It also said competition may increase through expansion of low-cost operators like Gull and Waitomo, but these moves would not address the core issue of an inactive wholesale market.
Gull is opening its first South Island petrol pump in the North Otago township of Maheno next month, Gull general manager Dave Bodger said.
He said how fuel will be sourced is confidential but he’s confident in the supply.
Mr Bennetts said a terminal gate price model would allow Z to have a better chance of competing for new business.
Mr Bennetts said an industry code being put in place with input from the Commerce Commission would be faster to introduce terminal gate prices than Government legislation.