Petrol price taxes: Prime Minister Jacinda Ardern takes on oil firms - BP, Z respond

Prime Minister Jacinda Ardern says the Government is taking action on reining in high fuel prices - but any relief at the pump may not come until next year.

Ardern launched a scathing attack on fuel companies yesterday, saying she thinks "consumers are being fleeced" at the petrol pump.

"I am hugely disappointed in the level of price that consumers are currently paying at the pump for fuel," she said at her weekly post-Cabinet press conference on Monday.

But fuel companies hit back, blaming the Government's own taxes as a reason motorists might be feeling "fleeced".

Today Ardern doubled down on her concerns, telling Newstalk ZB's Mike Yardley the "landing price" of fuel in New Zealand had gone up by 19c a litre since the start of the year, while the excise tax had only increased 3.5c. Oil firms, she said, were most definitely "profiteering".

"New Zealand's pre-tax fuel price is the highest in the OECD, and 10 years ago it was not the highest."

Ardern said part of this could be down to competition.

"In Wellington they are paying more than Auckland – explain that to me. Even if as some suggest that 3.5c came off, I cannot guarantee it would not get gobbled up by fuel companies and consumers end up paying the same if not more."

Ardern said the Government's excise tax was "hypothecated", in this case meaning it all went back into roading.

"The Opposition increased excise by 17c while they were in government, now they are calling foul on anyone ever increasing it again. What project would they cancel? Now it is going into safety improvements and fixing regional roads."

Given the concerns about "anti-competitive behaviour" in the fuel market, Ardern has prioritised the passing of the Commerce Amendment Bill.

This would give the Commerce Commission the power to conduct market studies into fuel markets to better understand how the market is functioning.

Ardern said the legislation was likely to pass in two weeks.

"[Petrol companies] haven't opened up their books to us in the past; so we're going to have to force their hand."

However, any impacts of this would not likely be felt until next year.

"We are moving as quickly as we can, changing the law in the next two weeks is the best we can do. We hope there will be suggestions from the Commerce Commission by the first part of next year.

"We don't anticipate putting a cap on profit margins, but there may be suggestions about competition and the pre-tax fuel prices."

BP welcomed this announcement, with managing director Debi Boffa saying the Commerce Commission's independence would provide greater assurance to the New Zealand public and to Government that Kiwis were paying a fair price for fuel.

She said BP reviewed prices daily to ensure they were as competitive as possible.

"There are a number of factors that influence the price of fuel, some of which are not within our control, including cost of product, the exchange rate, and taxes and levies."

Boffa said recent price changes had been influenced by increases to the cost of product and the weakening NZ dollar.

"In addition to this, the Government recently introduced the Auckland regional fuel tax plus increased the national fuel excise by 3.5 cents per litre [plus GST], impacting the price of fuel for motorists in Auckland and across the country."

Z Energy chief executive Mike Bennetts said he was pleased to hear the Government would expedite the passing of legislation, but disagreed that fuel companies were "fleecing" Kiwi consumers.

"Z disputes that prices are unjustifiably high, and while margins have increased from an unsustainable level in 2008 which saw fuel majors exit New Zealand, it has not increased at the level suggested."

The fuel market was highly competitive, Bennetts said, adding that Z would release its half-year financials in early November.

"We look forward to sharing an audited, accurate view of our profits with the public then."

Mobil lead country manager Andrew McNaught said the company's prices since January 2018 had not moved in line with overall increases in tax, product cost and foreign exchange rates.

"We have directly absorbed some of these increased costs into our business, and they have not been passed on to the consumer," he said.

New Zealand had a highly competitive petroleum market, with three major fuel suppliers, a specialised retailer and two supermarket chains.

"Fuel prices in New Zealand are influenced by a number of factors, including excise duties and taxes, crude and refined product costs, transport, exchange rates, local market competition, discounts, additives, operating costs and margins," McNaught said.

Mobil aimed to offer "competitive prices while generating earnings that are used to support ongoing and future investments that are required to meet the growing demand for fuels in New Zealand".

It's irritating when you drive past a petrol pump

Steve Meharry says he's lucky to work in Auckland's CBD, enabling him to take public transport to and from work.

However, for someone who jumps behind the steering wheel each day, the mounting petrol taxes are maddening.

"I'm a little bit frustrated that basically we were promised no taxes and basically we get this excise tax coming in which is actually a tax," he told the Herald.

"On top of that we've obviously got petrol prices rising. I know they move up and down depending on the global economy but it doesn't help, it's only going to get worse."

Meharry lives on the North Shore and takes the bus into the CBD each day for work.

At his old job, he would occasionally drive to work but now working in the city, the good public transport links mean he doesn't have to.

Steve Meharry lives on the North Shore and takes the bus into the CBD each day rather than drive. Photo / Doug Sherring

However, his wife used to work at Middlemore Hospital and would have to drive to and from work because there wasn't a public transport service between the two.

"It took her an hour and a half and, with the petrol prices the way they are today, they'd kill her, that'd be another $200 a week?"

The current cost of electric vehicles had put him off buying one for now, he said.

And Meharry said his family was fortunate not to have to worry "too much" about the petrol tax diving into other costs they spend around the home.

"Like a lot of people, we'll just absorb it [the tax] ... we don't necessarily feel the pain that potentially others are feeling.

"It's irritating when you drive past a petrol pump," he said.

National Leader Simon Bridges has been critical of the Government and its fuel taxes which he said is pushing the price of petrol up.

"Unlike petrol, talk is cheap. And the Government is a big part of the reason why petrol prices are so high."

Petrol prices are creeping up to $2.50 in some parts of the county.

Ardern came out swinging on Monday, pointing the finger at fuel importers – such as Z Energy, BP, Mobil and Gull – and their margins.

"Between 2008 and 2017, the margins importers were taking for themselves more than doubled from 7 to 16 per cent.

"That increase represents a transfer of wealth from petrol consumers to producers, to the tune of hundreds of millions of dollars a year."

Between October 2017 and September this year, petrol prices have risen 39c – Ardern said just 6.8c of this was tax.

But 9.8c of that was down to the margin from importers, she said.

"I do not see that as acceptable."

In fact, she said that pre-tax, New Zealand has the highest cost for fuel in the OECD. In 2008, New Zealand had some of the lowest.

Given the concerns about "anti-competitive behaviour" in the fuel market, the Government has prioritised the passing of the Commerce Amendment Bill.

This bill would amend the Commerce Act to enable the Commission to undertake market studies.

Once passed, Energy Minister Megan Woods has signalled that she intends to ask the Minister of Commerce and Consumer Affairs Kris Faafoi to request the commission to conduct a market study into fuel markets to better understand how the market is functioning.

"I will nominate the fuel markets as a priority area," Ardern said.

Ardern is anticipating the bill to be passed in two weeks' time.

The study will report back next year, and the Government will prioritise a response to what the Commerce Commission finds.

In the past, some petrol companies have not played ball with the Government when asked about their margins.

"That is why we are passing legislation that will allow us to take a full market study, and will require full market co-operation," Ardern said.

"They haven't opened up their books to us in the past; so we're going to have to force their hand."

Bridges said the Government should axe its fuel tax increases to provide immediate relief to motorists.

"[Ardern] is saying consumers are being 'fleeced' while her Government is driving up fuel prices and taking hundreds of dollars from Kiwi households through higher taxes on fuel.

"The [Commerce Commission] inquiry will take months and any resulting changes could be years away. Meanwhile New Zealanders are paying record prices for petrol and the Government is collecting hundreds of millions of extra tax [dollars] from them."

But Ardern said the Government's excise tax has been just a "small part" of the petrol price increase.

"Even if we did remove [the excise taxes] I cannot guarantee that fuel companies would not simply absorb that themselves and consumers would pay the same price.