Prime Minister Jacinda Ardern says New Zealanders are being "fleeced" by fuel companies, and believes a new Bill will force the industry into greater transparency.
At a post-Cabinet press conference on Tuesday, she appeared visibly angry as she explained just how rapidly our petrol prices have risen.
"I am hugely concerned at the level of price consumers are currently paying at the pump for fuel," she told media.
In 2008, New Zealand had one of the lowest pre-tax fuel costs in the OECD. Ten years on, we now have the highest.
- Price of petrol hits 30-year high
- NZ dollar drops, petrol price rises
- Auckland fuel tax officially on the way
"You cannot tell me we do not have an issue in New Zealand when we have the highest pre-tax fuel cost in the OECD, and it's gone up by such a significant amount," Ms Ardern says.
"That's incredible, and some of it you simply cannot find an explanation for. I don't think that's acceptable. New Zealand consumers, in my book, are being fleeced."
Between October 27, 2017 and September 28, 2018, petrol prices rose by a whopping 39 cents. Of that increase, 6.8 cents could be attributed to taxes and levies, 22 cents to importer costs and 9.8 cents to importer margins.
Between 2008 and 2017, the margins importers were taking for themselves more than doubled from 7 percent to 16 percent.
"That increase represents a transfer of wealth from petrol consumers to producers to the tune of hundreds of millions of dollars a year," Ms Ardern says.
She mentioned that the international price of crude oil rose almost 30 percent just this year, but that "doesn't tell us the full picture of what is going on in New Zealand".
She also spoke about the differences in fuel prices between the South Island and Wellington and the rest of the North Island
"While there may be a slightly higher cost of transportation in the South Island, it is nowhere near equivalent to the differences in fuel prices now."
Prior to 2015, fuel prices were reasonably similar across the country, but by 2017 average gross margins in the South Island and Wellington have grown to almost 10 cents more expensive than the rest of the country.
The Government's increased fuel taxes have sparked outrage among many New Zealanders, but Ms Ardern says it's not the reason for our astronomical prices.
She says New Zealand has the fifth lowest fuel excise in the OECD, and taxes have played only a small role in the cost increase.
"The issue we have is even if we remove that excise, I cannot guarantee that fuel companies would not simply absorb that themselves and consumers would pay the same price."
- Petrol prices reach record high at $2.40 per litre
- Auckland Council votes for regional fuel tax
- ACC proposes higher levies for motorists in New Zealand
Concerns about anti-competitive behaviour in fuel market mean the Government will prioritise passing the Commerce Amendment Bill when Parliament resumes next week.
The Bill will compel companies to produce information to the Commerce Commission to fully understand how markets are functioning.
After it passes there will be a one month transition until it goes into effect, during which Commerce Minister Kris Faafoi will seek nominations from fellow Ministers for possible market studies.
Ms Ardern says she will nominate the fuel market as a priority area. The study will report back in 2019 and the Government will prioritise a response to it.
The Prime Minister says the Bill is necessary in order to "force the hand" of the fuel industry which has refused to cooperate with previous efforts to understand pricing.
"The last Government tried to undertake such a review but struggled to get the co-operation of the fuel industry. That is why we are passing legislation that will allow us to undertake a full market study and will require their cooperation."
She says a 2017 study found no good explanation for why New Zealanders were paying so much for petrol.
"That's not reasonable and we need to do something about it."
Newshub.
