MBIE Petrol Study

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#1913880 6-Dec-2017 15:09

shk292:

I find it amusing that one group of people in Auckland are whining about price differentials between stations being a bad thing, while others are pointing to a lack of price differential between stations in the South Island as evidence of price collusion.

Seriously, it's total bullsh17. Those with cheaper rent/less staff are creaming it, while those who with higher rent can afford to set whatever price they want. It's a complete sellers market.

tdgeek

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#1913894 6-Dec-2017 15:21

nickb800:

tdgeek:

tehgerbil:

EVERY SINGLE STATION regardless of brand (BP, Z, Caltex etc) are ALL the EXACT same price in Christchurch, there is no competition here whatsoever aside from the special "6c off pl with AA card" at Z, or "10c off with card at BP and Caltex"

Every single station owner is in cohorts with everyone else to ensure there's little point driving around, as the very miilisecond one puts up/down the price, the rest follow within effing hours.

It's such BS and very frustrating.

Price fixing, aka cartel

That doesn't necessarily equal price fixing. If you are selling a commodity product like petrol and have a number of competitors, it often makes economic sense to match your competitor's price, rather than start a price war.

I agree, except when they cease matching each other and work together and agree on a price.

Linuxluver

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#1913949 6-Dec-2017 16:50

networkn:

Linuxluver:

Petrol pricing is always at the mercy of exchange rates as the price of oil, even if sourced domestically, is set against a global price background.

It would be interesting to see what the correlation between exchange rate, and oil price and petrol prices are in NZ.

I recall someone talking recently about how they did a study and found it was utter BS (What they found was that even when Currency and Oil were low, petrol was still high) and sent it through to Judith Collins to review.

There is often a lag because the oil companies use all sorts of forward contracts and currency hedging methods that make it the pricing picture less than straightforward.....plus there is a competitive element in there, too.....at least at street level among retailers, if not at wholesale level from the oil companies themselves.

If it was simple they would have been brought into line decades ago. They've been playing games with government regulators for over 100 years in dozens of countries. They've got this. If it gets too hard, they have the government toppled either militarily or via dirty tricks.....or in some cases assassination. The mess in Venezuela is all about pissing off the oil companies.

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Linuxluver

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#1913950 6-Dec-2017 16:52

wellygary:

The issue is the "margin" that the importers/retailers are taking, and whether parts of the country are paying more than they should and are subsidising margins in other areas ( ie where market share is under threat from competition)

That's how business works. Not sure anything short of nationalisation would address that. "Cut-throat competition" has been around for a very long time. It was the main reason the US government broke up (founder) John D Rockefeller's Standard Oil in the US in the 1920s.

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Ouranos

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#1914050 6-Dec-2017 19:46

The Government is threatening to regulate fuel prices because the margins are supposedly too high. Anyone who believes that regulation leads to lower prices in the long term doesn't understand the history of regulation.

Fuel prices in NZ were regulated until 1988. The petrol price margin now is less than half what it was before regulation (in real terms). Even though the margin has increased in the last few years, it is currently around the average of the last 30 years.

Perhaps there is a case for petrol price margins being lower. But it needs to be a strong case to overcome the costs of imposing regulation.

Source: http://www.mbie.govt.nz/info-services/sectors-industries/energy/liquid-fuel-market/weekly-fuel-price-monitoring

CJC

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#1914368 7-Dec-2017 09:13

Not sure if they're always done it, but recently noted the local Paknsave petrol was 5c more expensive than a petrol station around the corner. Had never really looked at their prices before. Then it occured to me that the requirement of spending $70 in store for a 6c discount voucher actually only gets you a whole 1c off a litre at the pumps. What a deal.

1101

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#1914408 7-Dec-2017 10:28

The govt doesnt really give a rats arse about how much petrol companies are making.
Its smoke & mirrors, they need to be seen to do something before the extra petrol taxes hike up prices again, next year.

Govt tax grab = 66c per litre. Then gst to the final price.
Lets start there . If they really cared about petrol pricing they wouldnt consider another petrol tax

Govt regulated petrol prices was tried in NZ once before. Didnt really work.
And the reason so many petrol stations have similar LOCAL pricing , if you charge more than someone 2miles down the road, customers will simply go to the competition. Pricing will be close enough so that customers wont be bothered with shopping around.
The reason 2 petrol stations within visible distance of each other have the exact same price is common sense business practices.

Its not hard to look across the road to see the competitions pricing. There is no conspiracy.

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tdgeek

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#1914410 7-Dec-2017 10:31

1101:

The govt doesnt really give a rats arse about how much petrol companies are making.
Its smoke & mirrors, they need to be seen to do something before the extra petrol taxes hike up prices again, next year.

Govt tax grab = 66c per litre. Then gst to the final price.
Lets start there . If they really cared about petrol pricing they wouldnt consider another petrol tax

Govt regulated petrol prices was tried in NZ once before. Didnt really work.
And the reason so many petrol stations have similar LOCAL pricing , if you charge more than someone 2miles down the road, customers will simply go to the competition. Pricing will be close enough so that customers wont be bothered with shopping around.
The reason 2 petrol stations within visible distance of each other have the exact same price is common sense business practices.

Its not hard to look across the road to see the competitions pricing. There is no conspiracy.

Isnt the petrol tax for the Auckland City Council? I see Hamilton City Council is looking at the same. These are really locals paying for local roads

tehgerbil

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#1914434 7-Dec-2017 10:32

CJC:

Not sure if they're always done it, but recently noted the local Paknsave petrol was 5c more expensive than a petrol station around the corner. Had never really looked at their prices before. Then it occured to me that the requirement of spending $70 in store for a 6c discount voucher actually only gets you a whole 1c off a litre at the pumps. What a deal.

That is in essence what Consumer (I think?) argued - fuel vouchers are a poor/stupid tax. If you don't buy a lot of groceries you never get enough points on the card to get the subsidy, so you pay more, while those who do buy lots of groceries get the discount.

But the seller (due to the current market) can set their own price, so they deliberately factor in the loss via fuel vouchers in order to still come out on top.

MikeAqua

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#1914556 7-Dec-2017 12:42

Linuxluver:

Petrol pricing is always at the mercy of exchange rates as the price of oil, even if sourced domestically, is set against a global price background.

With the change of government the markets always "punish" NZ for not electing a multi-National loving government....as they did in 1999 when Labour won that time. It went for about 6 months and then the NZ$ rose and they got on with business.

I can't see this changing with an imported fuel.

But now there are alternatives for many people....and price of a kWh is much more stable and they are all made locally. You can even make them yourself.....

If anyone wants to get off the petrol price roller coaster......it's getting easier every day. Not yet possible for everyone, but do-able right now for many.

The best thing about electricity: It's made locally and isn't at the mercy of international markets.

The worst thing about electricity: It's made locally, and can't be imported.

Both production and distribution are vulnerable to weather and other natural risks.

We do have a high % of renewables, but our reserves aren't all that deep.

The back up plan production is gas, which is exposed to the vagaries of international market pricing. Consumers might not pay during the year we need lots of gas because rain levels are low, but they sure will in subsequent years. And if you are on spot-price during a really bad year ... shudder.

Mike

KrazyKid

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#1914588 7-Dec-2017 13:50

PaknSave here in Dunedin is $2.12 vs $2.14 in most of others the town.

However I think supermarket vouchers push the price up. Since very man and his dog can get 6c off the pump from all brands using one voucher or another it stands to reason the displayed price is 6c higher than otherwise to cover this extra cost.
Now consider that there are plenty of vouchers that are more than 6c so the basic pump price also include a factor that covers more than 6c.

Geektastic

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#1914897 7-Dec-2017 23:26

tdgeek:
Geektastic: Don’t panic:

”And Energy and Resources Minister Megan Woods is sending a stern message to fuel companies, warning the Government may intervene if it believes the industry is ripping off motorists at the fuel pump.”

Oh yes. Very stern indeed. Positively steely-eyed.

Pffft.

A stern message would be announcing the Commerce Commission (which is a toothless mangy old dog but the best we have) investigation without further ado.

You should have read the article, which included adding teeth to ComCom. National raised the same concerns. Or should she have said, nah, its all good?? This issue has transgressed both Govts, both raised concerns. ComCom has to be given that power, that apparently is the plan, but will be end 2018

Sure. However I am left wondering why it never had those powers and what the point of it would be if it had no power to force people to comply etc.

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#1914899 7-Dec-2017 23:27

MikeAqua:
Linuxluver:

Petrol pricing is always at the mercy of exchange rates as the price of oil, even if sourced domestically, is set against a global price background.

With the change of government the markets always "punish" NZ for not electing a multi-National loving government....as they did in 1999 when Labour won that time. It went for about 6 months and then the NZ$ rose and they got on with business.

I can't see this changing with an imported fuel.

But now there are alternatives for many people....and price of a kWh is much more stable and they are all made locally. You can even make them yourself.....

If anyone wants to get off the petrol price roller coaster......it's getting easier every day. Not yet possible for everyone, but do-able right now for many.

The best thing about electricity: It's made locally and isn't at the mercy of international markets.

The worst thing about electricity: It's made locally, and can't be imported.

Both production and distribution are vulnerable to weather and other natural risks.

We do have a high % of renewables, but our reserves aren't all that deep.

The back up plan production is gas, which is exposed to the vagaries of international market pricing. Consumers might not pay during the year we need lots of gas because rain levels are low, but they sure will in subsequent years. And if you are on spot-price during a really bad year ... shudder.

It CAN be imported, just not by NZ.

Geektastic

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#1914900 7-Dec-2017 23:29

1101:
The govt doesnt really give a rats arse about how much petrol companies are making.
Its smoke & mirrors, they need to be seen to do something before the extra petrol taxes hike up prices again, next year.

Govt tax grab = 66c per litre. Then gst to the final price.
Lets start there . If they really cared about petrol pricing they wouldnt consider another petrol tax

Govt regulated petrol prices was tried in NZ once before. Didnt really work.
And the reason so many petrol stations have similar LOCAL pricing , if you charge more than someone 2miles down the road, customers will simply go to the competition. Pricing will be close enough so that customers wont be bothered with shopping around.
The reason 2 petrol stations within visible distance of each other have the exact same price is common sense business practices.

Its not hard to look across the road to see the competitions pricing. There is no conspiracy.

The BP garage in our village does not display the fuel price other than on the pumps, so you actually have to go and look.

A couple of years ago, my wife was working in Auckland and she was buying petrol 40c a litre cheaper than I was!

tdgeek

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#1914975 8-Dec-2017 07:12

Geektastic:
tdgeek:

Geektastic: Don’t panic:

”And Energy and Resources Minister Megan Woods is sending a stern message to fuel companies, warning the Government may intervene if it believes the industry is ripping off motorists at the fuel pump.”

Oh yes. Very stern indeed. Positively steely-eyed.

Pffft.

A stern message would be announcing the Commerce Commission (which is a toothless mangy old dog but the best we have) investigation without further ado.

You should have read the article, which included adding teeth to ComCom. National raised the same concerns. Or should she have said, nah, its all good?? This issue has transgressed both Govts, both raised concerns. ComCom has to be given that power, that apparently is the plan, but will be end 2018

Sure. However I am left wondering why it never had those powers and what the point of it would be if it had no power to force people to comply etc.

Maybe there was never a need to have wholesale investigative capability. National could have done it but I doubt it was ever a big deal then. It seems to be now, and I assume, without checking, that the relationship now between wholesale, exchange rates and retail is skewed. Its always been a niggle, maybe now the straw broke the camels back. Fuel affects everything, from your petrol costs to toilet paper costs

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