The Commerce Commission’s latest analysis of fuel monitoring data shows retailers are quick to put petrol prices up in response to increased costs. However, they are slow to bring prices down when global oil prices fall or exchange rate changes reduce costs.
The Commissioner, Bryan Chapple, says Kiwi motorists often pay more for longer than they should and it’s costing them upwards of $15m per annum.
“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.
“Our findings suggest that petrol prices shoot up at the pump in response to increased costs. However, there is a noticeable lag in retail prices dropping in response to decreases in underlying costs,” Mr Chapple said.
Mr Chapple also said these findings are timely with the upcoming removal of the Auckland Regional Fuel Tax. That goes on June 30, 2024. The Commission has clear expectations that fuel companies will promptly pass the benefit of this reduced tax through to consumers.
Fuel delivered to the Auckland region from 1 July 2024 will be cheaper by 11.5 cents per litre. “If fuel companies don’t reflect this drop promptly in retail prices, Aucklanders could be over-paying by nearly $1 million in the first week alone,” said Mr Chapple.
“In a healthy and competitive fuel market, we expect to see changes in underlying costs fully passed through into retail prices promptly.”
Mr Chapple says the Commission will be keeping a close watch on the pricing tactics of fuel companies in future. This will include observing the pricing within and around the Auckland region before and after the Auckland Regional Fuel Tax is removed and reporting on its findings.
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