Record high prices could backfire on petrol companies, says Consumer NZ

Consumer New Zealand says record high petrol prices could backfire on fuel companies if nothing is done to bring them down.

Meanwhile the Automobile Association (AA) is urging the Government to cut ten cents of tax off the price per litre immediately.

The price of 91 octane fuel hit $2.30 per litre at some petrol stations today, the most it's ever cost in New Zealand.

Consumer NZ boss Sue Chetwin said fed-up motorists may simply opt for public transport, biking, or walking if filling the tank up became too expensive.

"Prices going up so strongly is not good from a consumer perspective, but it might encourage people to think differently about their transport."

Chetwin was in favour of the proposal to give the Commerce Commission extra powers to investigate collusion among petrol companies.

That would make discovering whether uncompetitive practices by fuel companies were behind price rises easier, Chetwin said.

She used last month's example of a leaked BP email lifting the lid on the company's pricing strategy in Ōtaki.

In the email, BP pricing manager Suzanne Lucas outlined a plan to counter dwindling sales in Ōtaki by increasing the fuel price across the entire region, with the expectation that competitors would match the new price.

But it wasn't only companies affecting fuel price - the Government also had the power to bring prices down, the AA's Mark Stockdale said.

Taxes, including a nearly 60c per litre excise, made up a large chunk of fuel prices, something many motorists may not realise, he said.

Stockdale wanted the Government to stop charging GST on fuel excise, a move which would see prices drop 10c a litre immediately.

What makes up the cost of a litre of petrol? NZ Herald graphic. Source: AA/ MBIE

Investigations into the industry would take time, and motorists wanted something done now to quell worries prices would simply keep rising, he said.

According to figures from the Ministry of Business, Innovation and Employment, the total duties and taxes added to each litre of petrol was nearly 66.5c, including a 60c excise and an ACC levy.

Currently the Government charges GST on the lot - a practice Stockdale said amounted to "taxing a tax".

"The AA thinks it's unfair, our members think it's unfair."

The Government has shown no willingness to reduce tax on petrol.

Asked if the Government would look at the fuel taxes in light of the increase, Finance Minister Grant Robertson said the focus was ensuring anti-competitive behaviour was not contributing to ratcheting up the price.

A breakdown of the duties, taxes and direct levies charged by the Government per litre of fuel. NZ Herald graphic. Source: MBIE

According to AA figures the price of 91 has risen by nearly 20 cents a litre since January, when it was 212.9c a litre.

And further rises of up to $3 a litre are "not out of the question", according to Ken Shirley of the Road Transport Forum NZ.

Shirley said he didn't want to be a "doomsday merchant", but the depreciating Kiwi dollar and a spike in Brent crude oil prices thanks to the US pulling out of the Iran deal likely meant rising fuel prices domestically.

"There's not much you can do about fluctuating global oil prices. One thing we can address is there's quite a regional variation across New Zealand."

The so-called "Gull effect" (cheaper petrol in areas where there was a Gull petrol station) could be spread further across the country if Gull was able to get access to fuel terminals in the lower North and South Islands, he said.

Shirley criticised the Government's regional fuel tax, which will add 11.5c a litre to fuel for Auckland motorists from July 1, calling the policy "nonsense".

"Governments tend to like beating up oil companies but could also look at themselves and what their contribution to increasing price is."