NZ motorists 'right to grumble about the price of petrol'

New Zealanders are paying more at the petrol pump than they would if there was real competition in the market, one commentator says.
Petrol prices have been in the news in recent weeks. A drop in oil prices has not filtered through to an equal decline in retail fuel prices.
An attack near the entrance to the Strait of Hormuz on Thursday night, New Zealand time, pushed up oil prices again – although this is expected to be short-lived.
Data from the International Energy Agency shows New Zealand petrol prices are among the more expensive in the world.
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In United States dollar terms, we paid US$1.55 a litre on average for "mig-range gasoline" last year, compared to US33c in Algeria. Australia paid US$1.16 and the UK US$1.67.
Ministry of Business Innovation and Employment data shows petrol importer margins are now near 40c per litre. Since the data set started in 2014, the only time margins were higher was at the end of last year.
The Commerce Commission is investigating fuel pricing but will not comment further until it releases a draft report in August.
NZIER chief economist Christina Leung said it was likely that there would be more of a crunch on motorists in future. "Given the concerns raised about disruptions to the supply of oil, crude oil prices will likely head higher which in turn should flow through to higher petrol prices. One offset could be if the New Zealand dollar was to appreciate, but that doesn't look likely given the increase in risk aversion."
Economist Cameron Bagrie, of Bagrie Economics, said because New Zealand's economy was dependent on commodity exporting, oil price drops often meant a drop in the New Zealand dollar, which dented the impact on the price motorists paid for petrol.
But Tim Hazledine, a professor of economics at the University of Auckland, said New Zealanders were right to grumble about how much petrol cost.
While much of the price was determined by the Government tax applied, he said New Zealanders probably paid too much for petrol because there had been consolidation in the market, which limited competition.
He said fuel outlets tended to compete on short-term discount offers, which allowed them to try to take market share from consumers without having to signal a lower price point to properly drive the price down.
More independent competition, such as Costco, which has signalled it will provide petrol when it opens in Auckland, should help to disrupt the market, he said. "When competitors come in that can't be ignore, all the firms tend to change their prices."
"We continue to monitor the price of crude and refined product on a daily basis to ensure we offer our customers a competitive price along with our other in-store offers and great service."

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