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Weekend Column: Petrol Price Ripoff?

Like it or not, higher costs across the board will be the likely outcome of the rise in petrol prices by an average 9c a litre within the last month. John Howard reports.

Late in the week Enterprise and Commerce Minister, Max Bradford, was reported, " As oil companies were operating in the world market, it was not surprising if their costs all increased at the same time and by the same amount and their retail prices would closely follow one another."

He went on to say that New Zealand motorists could expect to see pump prices here echo world market movements.

Fair enough, if our motorists were being treated equally in the world market. But, it seems they're not.

A South Australian Royal Automobile Association (RAA) survey released today showed prices in Adelaide rose by an average $Aus 5c a litre last month.

Remarkably, the monthly price rise in South Australian country centres, with very large distances from petrol refineries, were less with the rise in Broken Hill 0.8c - Mt Gambier 1c - and Renmark 2.1c

So, converting to NZ currency by calculating rate of exchange differences and rounding to whole NZ cents, over the last month petrol price rises in the main capitals were; Sydney $NZ 4c - Melbourne $NZ 7c - and Adelaide $NZ 6c.

New Zealand - a 9c increase.

From these calculations, and in the absence of any general public outrage, it seems to me that oil companies are simply charging on the basis of what they think they can get away with.

If prices at the pump are tied to world market prices and we are to believe that recent price rises are solely attributable to decisions by OPEC countries to cut production and force an increase in world oil prices, then surely we would still expect to see some closer parity between New Zealand and Australian prices.

About one-third of our petrol is imported with much of this coming from Singapore. With an open market, petrol in New Zealand's own refinery is priced according to movements in world markets. However the comparisons above reveal that might not be the case at all.

You might say there is an element of price gouging taking place in New Zealand, but I couldn't possibly comment.

In South Australia the RAA offers some good advice to its members - shop around because retailers are offering discounts up to $Aus 7c a litre and buy your petrol at the beginning of the week when prices are historically lower.

Now that's real competition!


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