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Gull's success proves petrol prices are too high

Deputy Prime Minister Jim Anderton met with Gull Petroleum today and wants to know why the major petrol companies can't deliver the lower prices they do in areas around Gull services stations to the rest of the country.

"I met with Gull because I wanted to know why the major petrol companies can afford to sell petrol up to 5 cents a litre cheaper around Gull stations than they do in the rest of the country," Deputy Prime Minister Jim Anderton said.

"I have been told by the major petrol companies that they did not know how Gull could afford such low prices and still be profitable. Gull has told me that despite tough competition from the major petrol companies they are profitable and are looking to expand in New Zealand.

"If it is profitable for one small petrol company to sell petrol at 5 cents less than its competitors sell it across the rest of New Zealand, the major petrol companies must be able to supply petrol more cheaply elsewhere.

"It seems that the major petrol companies are prepared to aggressively compete with Gull but not amongst themselves.

"In Australia the government until recently published a benchmark price for petrol in each region based on reasonable costs to import refine and distribute petrol.

"This independent benchmark was not a compulsory price setting mechanism but it greatly aided the debate on petrol prices. A similar scheme may work here. I will take up that issue with my coalition government colleagues.

"I am also concerned at the large regional differential for petrol prices across the country. It seems that the major petrol companies are charging more in the regions not just because of lower volumes but because they feel regions are 'prepared' to pay higher prices for petrol.

"An independent benchmark for petrol prices may help to bring some rationality to petrol prices across the regions as well," Jim Anderton said.

Enquiries Steven Collett (04) 471 9289 (021) 626 303

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