Government's belief it can control petrol prices 'political puffery' - Road Transport Forum chief

Petrol prices will continue to increase in New Zealand, despite the Government's belief that it can control the market, an expert says. 

Energy Minister Megan Woods said in May she would push for new legislation after a leaked email showed BP executives were bumping up prices in one area of the country to stem losses in another. 

But it seems Ms Woods' efforts have fallen flat, as petrol prices across New Zealand continue to skyrocket, with prices hitting a new high on Thursday, averaging $2.32 for a litre of 91 octane gas across the country.

Road Transport Forum New Zealand chief executive Ken Shirley says the Government's belief it can control petrol prices is "political puffery", telling The AM Show on Friday the irony is that the Government takes a big cut from oil sales themselves. 

There is legislation before Parliament seeking to give the Commerce Commission greater powers to obtain commercial information of petrol companies in order to regulate them. The Commission doesn't currently have the power to do so. 

But Mr Shirley says a single regulated government-set petrol price would never work, because "at the end of the day, the market is the market, and the Government doesn't have any free money - they can only take the money off us and then subsidise it". 

He said while it's frustrating that petrol prices keep increasing for Kiwis, such as the Regional Fuel Tax introduced in Auckland on July 1, it wouldn't be so bad if that extra Government money was going into projects that benefit people on the roads. 

Mr Shirley claims money collected from excise tax is going into other "ambitious" long-term projects the Government has earmarked.

But the Ministry of Transport says petrol tax, combined with road user charges, pay for 95 percent of state highways, while vehicle licensing pays for the rest. State highways, it says, are funded entirely by central government, with maintenance responsibilities falling to NZ Transport Agency, and contributions from local councils. 

"I think we accept on a user-pay basis, if you're getting as road users the benefit such as new investments in a highway, that's great, but when they're just using it as a fund to cross-subsidise, that's when road users should be concerned."

AA Petrol Watch spokesperson Mark Stockdale said current petrol prices are the highest Kiwis have ever paid, although in 1985 people were paying the equivalent of $2.60 a litre in 2017 dollars.

He said the increased price has been driven by rising oil prices internationally and will go up a further 3.5 cents per litre on October 1 when the nationwide petrol tax increases.

Mr Shirley said Kiwis shouldn't be surprised that prices keep rising. There's different cost in distribution, supply and demand. But as petrol prices increase across the country, the cost of living will also increase, he warns. 

"You'll pay more to drive your car to the supermarket and then you'll pay more to buy the goods delivered to the supermarket," he said, adding that's "just the nature of it".

"If you're on the Chatham Islands or Great Barrier Island, you've been paying over $3 a litre for a long time."