Commission calls out petrol firms

The Commerce Commission says delays by retailers in dropping petrol prices are costing New Zealand motorists about $15 million a year at the pump.

Its latest analysis of fuel monitoring data shows companies are quick to put fuel prices up in response to increased costs but slower to bring them down when global oil prices fall or exchange rate changes reduce costs.

Bryan Chapple, commissioner, says this results in consumers often paying more for longer than they should.

“We can see clear evidence showing that fuel companies maintain temporarily higher margins after a decrease in their costs, lasting up to two weeks – at great expense to Kiwi motorists,” he explains.

“Our findings suggest that petrol prices shoot up at the pump in response to increased costs, but there is a noticeable lag in retail prices being lowered in response to decreases in underlying costs.”

The commission estimates that if fuel companies drop prices as quickly as they increase them when costs change, motorists would benefit by about $15m a year.

Chapple says the findings are timely with the Auckland regional fuel tax set to be removed on June 30, and expectations fuel companies will promptly pass the benefit on to consumers.

He adds that fuel delivered to the Auckland region from July 1 will be cheaper by 11.5 cents per litre and if prices at the pumps don’t drop swiftly “Aucklanders could be over-paying by nearly $1m in the first week alone”.

“In a healthy and competitive fuel market, we expect to see changes in underlying costs fully passed through into retail prices promptly.”