Cut-price petrol stations planning massive New Zealand expansion

Low-cost petrol stations are preparing for a massive New Zealand expansion that could rock the fuel market and deliver massive benefits to consumers.

The AM Show host Duncan Garner says he understands about a dozen Gull petrol stations are being planned in the next couple of years. It's backed up by the Automobile Association's principal regulations adviser Mark Stockdale.

"We're certainly hearing from the companies like Gull, they're saying they want to enter Wellington," Mr Stockdale says.

"Waitomo are now moving to Wellington. These are all low-cost brands who say they will be able to charge a lower price than what motorists in those areas are used to."

From Wednesday, petrol companies face increased scrutiny after the Government ordered a wide ranging inquiry into their operations.

The Government inquiry's terms of reference include looking at the structure of the industry and factors hindering competition conditions for entry into the market for independent suppliers.

This includes what the barriers are to getting cheap fuel chains to expand their infrastructure.

"We need to understand if the market is operating competitively or not and whether those prices are fair or not, whether those fuel companies are making too much money," Mr Stockdale says.

"And it's really around those low-costs brands. They're the ones that have sort of been dragging prices down in parts of New Zealand.

"Companies like Gull and other brands like Waitomo, Nelson Petroleum Distribution, and what can be done for them to expand into more parts of the country, and particularly Wellington and the South Island where those brands traditionally haven't operated."

Part of the problem is the ownership of fuel infrastructure like pipelines and terminals, necessary to run the petrol stations.

Mr Stockdale says Gull had to build its own in Mt Maunganui, and this will be a challenge if they want to move down the country.

"Is it economic for it to do that? South Island is a much smaller market than the North Island," he says.

"Maybe they need a little bit of help in terms of getting access to those terminals. That does happen in Australia, so maybe that's something that needs to be looked at here."