The new rules coming for fuel suppliers as Government tries to boost competition

Fuel suppliers will be facing new rules as the Government tries to boost market competition, after a report found Kiwis haven't been paying a fair price at the pump. 

The Commerce Commission released two reports in 2019 describing New Zealand's fuel market as "not as competitive as it should be". 

Energy Minister Megan Woods has now released the Government's much-anticipated response. The fuel industry will be required to abide by "a more transparent wholesale pricing regime", requiring fuel suppliers to publicly post the prices they sell to wholesale customers. 

New rules will ensure contracts between wholesale fuel suppliers and their customers "are fair and support competition", and a dispute resolution scheme will be established. 

The Fuel Market Bill will also require fuel companies to collect and disclose certain information to improve transparency in the sector. 

"The action the Government is taking in response to the commission's report forms a package of solutions to deal with entrenched problems that have been around since the 1980s," Woods said on Thursday. 

"We know that the cost of fuel is significant for households and businesses. The Government is giving this Bill priority and we will pass it into law later this year."

The Government has accepted or "noted" most of the commission's recommendations, including making petrol stations display premium fuel prices on price boards. 

It has also agreed to monitor the display of discount pricing on displays to assess whether it benefits consumers or limits competition. 

But the Government said it needs to "consider further" the recommendation to require fuel cap stickers specifying the minimum octane level required for a vehicle, because some consumers are using premium fuel when they don't need to.

Energy Minister Megan Woods seated next to Finance Minister Grant Robertson.
Energy Minister Megan Woods seated next to Finance Minister Grant Robertson. Photo credit: Getty

"While the cost of producing and attaching labels is unlikely to be a significant cost for sellers of vehicles, there are some challenges in getting the relevant information for all vehicles," the Government said.  

In its preliminary report to the Government released in August, the commission noted how New Zealand's fuel market is dominated by three players: Z Energy, BP and Mobil.

The companies use a shared network to supply about 90 percent of the nation's petrol and diesel, either through their own branded service or via other distributors or resellers on exclusive wholesale contracts.

Without access to the main companies' shared network or the wholesale market, the commission said new importers would struggle to establish a standalone chain.

Woods said she has written to fuel companies asking them to respond to the commission's recommendation to reconsider shared storage arrangements. 

Woods requested the commission's investigation after a spike in petrol prices in late 2018, leading Prime Minister Jacinda Ardern to declare in late 2018 that Kiwis were "being fleeced" at the pump. 

Six months later, Opposition leader Simon Bridges branded Ardern the "Fleecer-in-Chief with all the taxes she's piled on", referring to the annual 3.5 cents per litre increase to the petrol excise tax. 

A further 3.5 cents per litre increase is planned to be introduced this year. 

ACT leader David Seymour has said if the Government is going to require petrol stations to display premium prices on price boards, it should also require displays showing what proportion of the price is tax.

This diagram shows how much tax is included in the price of fuel in New Zealand.
This diagram shows how much tax is included in the price of fuel in New Zealand. Photo credit: Commerce Commission

Petrol prices have eased a bit so far this year, with AA's monthly petrol price watch showing the national price of a litre of 91 octane was down from $2.389 on December 27 to $2.299 on January 30. 

 

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