Probe into massive fuel price swing

The Commerce Commission will be able to investigate collusion among petrol companies following a report showing a massive swing in fuel prices in the last decade, transferring hundreds of millions of dollars a year from motorists to petrol companies.

And Energy and Resources Minister Megan Woods is sending a stern message to fuel companies, saying that Government intervention remains on the table if it believes the industry is ripping off motorists at the fuel pump.

An updated report on fuel prices was released today by the Ministry of Business, Innovation and Employment, reinforcing that it had "reason to believe" that the market was not fully competitive and that fuel prices were unreasonable.

The report noted that since 2008, New Zealand moved from the "bottom third of OECD countries in terms of pre-tax premium petrol prices to being the most expensive", amounting to a "wealth transfer from consumers to producers, increasing the effective living costs of motorists".

At the same time there was a "rising spread" in fuel prices between Wellington and the South Island compared to the rest of the North Island. Fuel prices are at their highest in three years, hitting 214.9c per litre for unleaded in central Wellington.

"Based on MBIE data, retail petrol margins have increased by over 18 cents per litre between 2008 and 2017, equating to an additional cost per motorist of close to $150 per annum over that period," the report said.

"An additional one cent per litre on petrol equates to an additional cost to consumers of approximately $32 million per annum. This means that the potential wealth transfer from consumers to fuel suppliers since 2008 is likely measured in the hundreds of millions of dollars per annum."

The report is an update on an earlier report released in July under former minister and National MP Judith Collins, who had raised the issue of giving the Commerce Commission more powers.

Collins said the initial report was stymied because Mobil and Gull refused to provide the requested market information, which Z and BP did provide.

Minister of Commerce and Consumer Affairs Kris Faafoi has now asked officials to fast-track work to empower the Commerce Commission to investigate collusion without evidence, and force companies to provide information on how the market functions.

He said he wanted the commission to have the powers, which require changing the Commerce Act, by the end of next year.

"The Commerce Commission also needs to be able to self-initiate these studies where they see that markets are not doing a good job for New Zealanders. Having thorough information and shining a light on a market enables us then as Government to decide if we need to take any action," Faafoi said.

In the meantime, Woods is sending a stern warning to the fuel companies, asking MBIE to continue to monitor the market and to make regulatory recommendations about enhancing market competition.

It is believed that all options are on the table, including limiting vertical integration or boosting third party access.

"While these powers are being provided for, I have also instructed MBIE officials to continue to monitor the market and explore options for regulatory interventions to enhance competition as required." Woods said.