Monday, April 22, 2024

Fuel companies quizzed on pump prices

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National disparities in prices ‘concerning’, says Commerce Commission.
The cut in the fuel price is estimated to reduce the price of a 60-litre tank of petrol by $17.25.
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The Commerce Commission is asking fuel companies to explain why prices at the pump vary so much among fuel stations. 

Commerce Commission chair John Small said he had written to all the major fuel companies asking them to explain “concerning” differences in fuel costs at different stations. 

Small said that in the quarterly fuel monitoring report in March there were differences in price for which there was no clear explanation. 

“We are seeing wide variations in prices both between and within cities, and these pricing differences do not appear to be explained by differences in the underlying costs,” Small said. 

“In a competitive market, we’d expect to see prices at the pump reflect the cost of supplying fuel at the pump, whereas what we are seeing is retailers in some towns and cities charging a lot more for what is essentially the same product with similar cost components.” 

As an example of hard-to-explain differences, the Commerce Commission cited the price for fuel in Whangārei, where consumers paid the highest prices for petrol, to Hamilton, where some of the lowest prices were seen. 

“Marsden Point is our nearest port to major fuel sources like Singapore and South Korea, and being near the Marsden Point import terminal means higher prices can’t simply be explained by higher ocean or local transport costs,” Small said.

“Land costs in Whangārei don’t shed any light on these prices either.”

The commission was given the responsibility of monitoring terminal gate pricing (TGP) – the price consumers pay for fuel – under the Fuel Industry Act 2020. 

A Commerce Commission market study in 2019 found problems in the competitiveness of fuel markets, prompting the government to introduce the law, with regulations coming into effect in stages.

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