Ōtautahi – The Commerce Commission’s first report on the performance of New Zealand’s $10 billion fuel market shows encouraging signs of competition and Kiwi motorists can play an important part in further stimulating the industry.
Initial analysis from the quarterly fuel monitoring report for the three months ended June 2022 shows while discounting is a prominent feature of the New Zealand retail fuel market, discounted prices do not always represent the lowest price.
Commissioner John Small says there is wide variation in prices between nearby fuel sites in many areas of New Zealand and in some cases people can get a better deal simply by crossing the road to another petrol station.
Kiwi motorists have choice, and we encourage shopping around for the best deal before filling up the tank, Dr Small says.
New consumer information requirements that came into force in February mean pricing boards at petrol stations must display pricing for regular and premium grade petrol along with diesel that is clearly visible to motorists at the site or passing by.
Dr Small says fuel accounts for about half, almost $2000 of annual household energy costs, so even a small difference in the price per litre could result in meaningful savings at a time when many New Zealanders are facing cost of living pressures.
For Regular 91, based on the average across New Zealand, the report revealed that importers’ retail sites offering discounts were not offering the lowest retail price after taking account of discounts. In some cases, independent retailers without discount programmes had the lowest retail price.
The more Kiwi motorists are shopping for the lowest price in their local area, the more this will help drive healthy competition over time. This is an important factor in helping keep downward pressure on the price at the pump and delivering better value to New Zealanders.
While fuel prices increased during the June quarter driven primarily by the international price of crude oil and foreign exchange movements, the average importer margins were 32 percent lower for diesel and 27 percent lower for Regular 91 when compared with margins in 2018.
Dr Small says falling importer margins are usually a positive indicator that competition has intensified but further analysis in subsequent periods will give a better indication of whether the reduction has been sustained over time.
“We expect to build a more robust picture of how competition is evolving over time as more data becomes available and is published in future reports.”
Dr Small says, as competitive conditions and retail prices likely vary across the country, the Commission intends to also undertake further analysis of prices and discounts at the local and regional level. This may include a wider range of fuel retailers such as independent retailers.
