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1 cent Oil reduction just a drop in the bucket


1 cent reduction just a drop in the bucket for regions

Today in parliament the Deputy Prime Minister expressed concern about regional variations in petrol prices around the country and the admission from one petrol company that the reason petrol prices were high in the regions was because people were prepared to pay for the higher prices.

"I am concerned about the wide differential in petrol prices between the main cities and the regions and the effect that will inevitably have on regional development," Deputy Prime Minister Jim Anderton said.

"I have seen an explanation from a Shell spokesperson saying that the reason petrol is 7 cents dearer in Northland than it is in Auckland is not because of transport costs but because that is what people are willing to pay for it.

"The same report quotes a former fuel distributor who said that petrol companies are making a $2000 profit per tanker in Northland. On a 40,000 litre tanker that represents a 5% margin for petrol companies because they think people in Northland are prepared to pay higher prices.

"I find this admission incredible as there is no one in Northland who wants to pay high petrol prices especially since most of our petrol is actually refined in Northland.

Commenting on today's 1 cent a litre price decrease Mr Anderton said.

"While petrol prices are coming down they are not coming down far enough and the regional differential is still far too great.

"Average petrol prices have risen by 22 cents a litre since July last year. Crude Oil prices on the other hand have fallen 21 percent from the recent peak of US $35 a barrel. Last week petrol prices dropped by only 2 cents a litre, today they have only dropped by 1 cent a litre. That is not enough given the huge decrease in oil prices over the last few months.

"Petrol prices are the lowest in the Tauranga region where there is vigorous competition with independent station Gull. It seems that where there is competition with a station outside the big four petrol companies, prices are lower than where there is only competition between the big four," Jim Anderton said.

Contact Steven Collett on (04) 471 9289 or (021) 626 303 for further information

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