Govt to vet fuel pricing structure

Liane Dalziel
Liane Dalziel
Oil suppliers presiding over unprecedented hardship among drivers will have their pricing structures put under the gaze of a Government-ordered inquiry.

Commerce Minister Lianne Dalziel said last night that independent consultants would also examine similarities and differences between fuel markets in New Zealand and Australia.

Australia is about to extend the geographic reach of a scheme requiring oil companies to give motorists advance notice of price rises.

Although it was unclear whether such a scheme would work in New Zealand's smaller market, and she was reluctant to raise unrealistic hopes, she said the chairman of the Australian Competition and Consumer Commission (ACCC) indicated to her in Wellington on Friday that a prototype scheme in Perth was delivering savings of "more than a couple of cents".

That scheme, called Fuelwatch, requires oil companies to post their next day's prices on a website and is set to be extended throughout Australia in December.

Ms Dalziel's comments follow a week in which New Zealand motorists were hit with price rises of 10c-12c a litre for petrol and diesel.

Main centre prices for 91-octane petrol of 210.9c-212.9c a litre are 35% higher than this time last year, and diesel has soared by about 80% to 183.9c-185.9c.

Petrol is 22c-24c a litre more expensive than in early May, when the minister first held discussions with the Automobile Association over that organisation's call for an inquiry into the New Zealand fuel market's pricing structure.

The consultants are expected to take about six weeks to conduct their inquiry under contract to the Ministry of Economic Development, which will report to Ms Dalziel, Consumer Affairs Minister Judith Tizard and Associate Transport Minister Harry Duynhoven.

AA spokesman Mark Stockdale welcomed the Government's decision to commission the inquiry, as well as the work of ministry officials with his organisation in considering ways of improving fuel price transparency, including turning weekly monitoring into daily reporting schedules.

But he said organisations representing Australian motorists were sceptical about the Fuelwatch scheme, suspecting it of flattening price peaks and troughs to the point of reducing potential savings at the bottom of a weekly cycle not seen in this country.

Caltex spokeswoman Sharon Buckland said a debate raging in Australia cast strong doubt over the scheme, although her company would support the greater transparency of more regular pricing updates by the ministry, as long as it did not have to bear extra compliance costs.

She said it was in the interests of oil companies for the public to be well informed about the industry's pricing structure, and the extent to which international cost pressures left them little room to move.

Ms Dalziel said Australian oil companies already paid an organisation to collect their price information and publish it within their industry, but the advantage of Fuelwatch was that it was putting power into the hands of consumers.

She believed it was therefore being resisted by vested interests which did not want "power going back to the people".

She said evidence to the Australian Senate by the ACCC had scotched the claim of higher prices under the Fuelwatch scheme.

The minister acknowledged that any savings to be gained in this country were likely to be only "marginal", given the major influence of international oil prices and currency movements.

But she was looking forward to the oil industry taking an opportunity from the inquiry to explain to the public "why it takes so long for price decreases in crude oil to come through to the New Zealand petrol pump and why it is so quick to get the price increases through".

Consumer NZ chief executive Sue Chetwin said that although it might not be possible to transplant the Australian scheme to this country, any such possibility for easing the price burden on motorists should be explored.

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