Petrol prices! Collins to get to the bottom of it

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#1716496 7-Feb-2017 13:22

How is that more of a "scam" than, for example, Briscoes' sales? Surely any business is free to offer sales/discounts when they wish.

MikeAqua

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#1716510 7-Feb-2017 13:47

In theory you are not supposed to sell at a loss to force competitors out of the market it's called predatory pricing beyond that you can discount (even below cost) as much as you like domestically to buy market share.

Oil companies may be happy to do that to get market share (they make money from non-fuel purchases as well).

Supermarkets will be contributing to the discounts costs as well - again to get people through the door.

Personally I would rather consistently cheaper fuel and groceries. But I do like those 40c discount vouchers. I'll happily go and stock up on non-perishables, to take advantage.

When you used to be able to get 200L with 40c off it was fill the boat (150L) and the car and the jerry can for the lawn-mower!

"if there's one thing Dad loved better than serenity it was a two stroke on full throttle"

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trig42

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#1716537 7-Feb-2017 14:16

MikeAqua:

In theory you are not supposed to sell at a loss to force competitors out of the market it's called predatory pricing beyond that you can discount (even below cost) as much as you like domestically to buy market share.

Oil companies may be happy to do that to get market share (they make money from non-fuel purchases as well).

Supermarkets will be contributing to the discounts costs as well - again to get people through the door.

Personally I would rather consistently cheaper fuel and groceries. But I do like those 40c discount vouchers. I'll happily go and stock up on non-perishables, to take advantage.

When you used to be able to get 200L with 40c off it was fill the boat (150L) and the car and the jerry can for the lawn-mower!

"if there's one thing Dad loved better than serenity it was a two stroke on full throttle"

Off topic, but gold. Take that straight to the Pool Room!

@Linuxluver - how much to fully charge your Leaf (Gen2)?

alliao

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#1716589 7-Feb-2017 15:08

Behodar:

How is that more of a "scam" than, for example, Briscoes' sales? Surely any business is free to offer sales/discounts when they wish.

I remember Kathmandu got dinged for having specials on all the time, but upon closer observation apparently it's vaguely worded as well. I suppose it depends on people's perception of infrastructure.

Is oil important to the economy? Should it be highly competitive? Should competition drive prices low for some or for all as a country?

You can see things start to get pretty philosophical...

sen8or

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#1716601 7-Feb-2017 15:20

It always makes me laugh, when the price of petrol rises rapidly its because of the price of crude and/or the $ devaluing pushing up prices. When the price of crude and/or the $ move the other direction, its the cost of processed fuel that keeps prices from going down at the same rate they went up.

Someone only has to fart in a manner that is remotely unpleasant in the middle east and that seems to be enough to trigger a price rise based on the fear of something bad happening.....

MikeAqua

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#1716607 7-Feb-2017 15:31

sen8or:

Someone only has to fart in a manner that is remotely unpleasant in the middle east and that seems to be enough to trigger a price rise based on the fear of something bad happening.....

And with all the chickpeas consumed over there ...

Mike

Oblivian

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#1716627 7-Feb-2017 16:03

sen8or:

It always makes me laugh, when the price of petrol rises rapidly its because of the price of crude and/or the $ devaluing pushing up prices. When the price of crude and/or the $ move the other direction, its the cost of processed fuel that keeps prices from going down at the same rate they went up.

Someone only has to fart in a manner that is remotely unpleasant in the middle east and that seems to be enough to trigger a price rise based on the fear of something bad happening.....

Now this is where it gets interesting. As yep, it does fluctuate with speculators and any chance of hurting the stocks. Which is ironic, given only a chunk of it is from there. The rest is sourced from Asia/Singapore and Russia.

Theres pleanty of public charts about, and it's when those are spiking that the ministry raises an eyebrow. Unfortunately the discounting schemes are skewing these results now. They even had to change the way its calculated around them. http://www.mbie.govt.nz/info-services/sectors-industries/energy/liquid-fuel-market/weekly-oil-price-monitoring

The reason they are trying to regulate while not regulate (they did once upon a time.. MBIE outline that too) hinges around the importation margins. That's something they cannot avoid, and as such are meant to all pass it on equally. But what they find is often this margin doesn't shift, but the pump price can. And it appears that's what raises such articles as the source of this thread. If that's been boosted to account for the discounting schemes (we are now about 4 months in on a continual Mobil 6c pump discount...) then it won't be considered a fair playing ground.

The four largest domestic oil companies own bulk storage facilities throughout New Zealand and have agreements in place which allow access to each other’s storage facilities. This enables the companies to draw stock from any location, if they have authorisation and sufficient stock in another location. This pooled storage system allows the companies to jointly manage stock levels and co-ordinate import shipments of petroleum products.

Gull operates its own independent petroleum storage terminal at Mount Maunganui. Products are transported from Mount Maunganui to Gull’s retail outlets by road tanker.

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mattwnz

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#1716629 7-Feb-2017 16:12

MikeAqua:

In theory you are not supposed to sell at a loss to force competitors out of the market it's called predatory pricing beyond that you can discount (even below cost) as much as you like domestically to buy market share.

I am sure there are some companies in other retail markets that do something like this, by setting up cheaper sub brands. So the main brand subsidizes the loss that the other brand makes. The benefit of the cheap brand to the company is that it takes business away from the competitors, which weakens the competition and eventually drives them out of business as they can't compete with the lower prices. Then once the competitors have gone, they may put up their prices. The problem is that it is very difficult to prove that a business maybe doing this, and I don't think there is much policing of it

sbiddle

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#1716728 7-Feb-2017 19:00

Behodar:

How is that more of a "scam" than, for example, Briscoes' sales? Surely any business is free to offer sales/discounts when they wish.

I have fundamental issues with the Briscoes price model, unfortunately it seems people get sucked in by it leading to them being a very successful company. Unless you buy something from them with 60% off you are being ripped off due to their inflated pricing.

To quote the FTA - you're basically breaking the law if you

"has a strategy of deliberately inflating the usual price of goods or services, knowing it will lead to no or few sales, so the business can attract customers by subsequently offering the goods or services at a discounted price"

We've now seen at least half a dozen petrol price increases in a row where pricing has increased on say a Monday and by Thu/Fri you've had extra discounting with Smartfuel. You can spin anything you like such as "it's marketing spend" or "discounting happens at any time and is unrelated to price" but I for one struggle to believe either.

sbiddle

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#1716730 7-Feb-2017 19:04

Oblivian:

Theres pleanty of public charts about, and it's when those are spiking that the ministry raises an eyebrow. Unfortunately the discounting schemes are skewing these results now. They even had to change the way its calculated around them. http://www.mbie.govt.nz/info-services/sectors-industries/energy/liquid-fuel-market/weekly-oil-price-monitoring

MBIE's current modelling of discounting is flawed. They know it, but it's not something they can easily fix or now model due to the systemic discounting that's occurring.

In a nutshell anybody paying the national price for petrol is subsidising everybody else who's getting a discounting, and that's wrong.

alliao

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#1716769 7-Feb-2017 20:19

sbiddle:

MBIE's current modelling of discounting is flawed. They know it, but it's not something they can easily fix or now model due to the systemic discounting that's occurring.

In a nutshell anybody paying the national price for petrol is subsidising everybody else who's getting a discounting, and that's wrong.

I wouldn't even call it discounted price. No way they're making a loss at any given time. So "discounting" prices are really the normal price, and national price is straight up highway robbery. But then I'm running out of terms for the crazily inflated 95/98 prices.

surfisup1000

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#1716872 7-Feb-2017 22:03

My skeptical self believes the government are only doing this so they can lower petrol prices which will allow them to increase petrol taxes .

Owning a petrol station in the past has been a very marginal business, where profits are made from the extras rather than core product. So, they are starting to fatten out some margins now.

Although, I have been too lazy to see who is raking in the fatter margins -- the retail stations or the suppliers?

old3eyes

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#1716986 8-Feb-2017 08:52

sbiddle:

Oblivian:

Theres pleanty of public charts about, and it's when those are spiking that the ministry raises an eyebrow. Unfortunately the discounting schemes are skewing these results now. They even had to change the way its calculated around them. http://www.mbie.govt.nz/info-services/sectors-industries/energy/liquid-fuel-market/weekly-oil-price-monitoring

MBIE's current modelling of discounting is flawed. They know it, but it's not something they can easily fix or now model due to the systemic discounting that's occurring.

In a nutshell anybody paying the national price for petrol is subsidising everybody else who's getting a discounting, and that's wrong.

But you're only saying that because you have a fuel card and don't get the fuel discounts My wife has a Mobil card and can't get any 6 cents off discounts..

Regards,

Old3eyes

Behodar

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#1716989 8-Feb-2017 08:59

sbiddle: We've now seen at least half a dozen petrol price increases in a row where pricing has increased on say a Monday and by Thu/Fri you've had extra discounting with Smartfuel.

Ah, now there's the missing piece of the puzzle! In that case, where they're actually messing with the base price, then I'd agree that that's sneaky and "scammy".

MikeAqua

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#1717018 8-Feb-2017 09:46

mattwnz:

MikeAqua:

In theory you are not supposed to sell at a loss to force competitors out of the market it's called predatory pricing beyond that you can discount (even below cost) as much as you like domestically to buy market share.

I am sure there are some companies in other retail markets that do something like this, by setting up cheaper sub brands. So the main brand subsidizes the loss that the other brand makes. The benefit of the cheap brand to the company is that it takes business away from the competitors, which weakens the competition and eventually drives them out of business as they can't compete with the lower prices. Then once the competitors have gone, they may put up their prices. The problem is that it is very difficult to prove that a business maybe doing this, and I don't think there is much policing of it

Freedom Air ...

Mike

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