It is couched in tentative language and tells us little we did not already know.
It would seem, by its insipid results, that the inquiry’s purpose was to create the impression the Government and Energy Minister Judith Collins were doing something.
Action was taken because a report was ordered, and now the issue is shifted to November and after the September election.
Fundamentally, the report asks again why retail petrol prices are so much higher in Wellington and the South Island. Everyone already knows this is because Gull does not sell in these areas.
The petrol retailers can concentrate their efforts where Gull sets up shop and boost margins elsewhere. The companies could, in fact, be using higher southern prices to subsidise those in the north.
The minister’s statement says the study on the market ‘‘confirms that it has features which may not be consistent with a workably competitive market’’.
How obvious.
The report itself says there were difficulties in comparing the information received from the companies, and some very specific information that was required could not be obtained. This is the excuse for the vague conclusion in the report that ‘‘we cannot definitely say that fuel prices in New Zealand are reasonable, but we have reason to believe they might not be’’.
Z Energy and BP provided everything that was asked for and Gull and Mobil most of what was sought. Supposedly, the information not supplied was essential. But, surely, Mobil’s situation would have mirrored Z and BP. And Gull, which said it did not have the resources to supply the information in time, is not the villain in this piece.
Surely, stronger conclusions were in order, even without every last piece of information. It defies common sense that competition is working properly
between Z, BP and Mobil (and formerly Caltex now owned by Z) when southern prices are consistently so much higher than in north.
The report, at least, says the price difference is not justified by higher southern costs.
The survey period goes back five years, and margins have doubled in that time. That, again, cannot be a market working effectively, even if margins were extremely tight at one point.
Somehow, too, the southern price dropped about 10c about three weeks ago for no apparent fresh reason.
As reported in the Otago Daily Times, the drop was just a few weeks before the release of the study findings.
All the loyalty schemes and docket discounts make pricing murkier, which suits the oil companies. And if 30c or 40c discounts are possible on occasions, that, too, points to fat margins for what is a bulk and high turnover product.
Petrol prices illustrate both the strength and weaknesses of competition markets. Gull’s 60 North Island stations sharpened the response of competitors, and
motorists benefited. Motorists, in other areas, however, have been cheated.
Competition is vital in consumer affairs. But, especially in a small nation like New Zealand, regulation and market intervention can be necessary as well.
The onus in a case as blatant as this should be on officials to prove competition is not working but on the respective com panies to establish it is.
Ms Collins has instructed officials to assess the recommendations of the study and report back by November.
Motorists from Wellington south should be expecting more decisive conclusions and effective action.
Petrol in New Zealand will never be cheap. There is about 70c a litre in Government taxes for a start. Add in the cost of refining, distribution and sales
and even if oil was $US1 a barrel petrol would cost about $1.25 to $1.30 a litre.
Notwithstanding that, South Island and Wellington motorists are justifiably peeved at the extra they pay at the pump.
