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Oil Co.s Should Use Subsidy Money To Cut Prices

Oil Co.s Should Use Subsidy Money To Bring Down Pump Prices

Oil companies should use the cash they are currently putting into price subsidy schemes to bring down the price of petrol for all motorists, Deputy Prime Minister Jim Anderton says.

A report today reveals that Shell has joined BP in offering cash incentives to petrol retailers. The incentives are offered when retailers match the price charged by competing retail outlets.

The Commerce Commission is currently investigating the lawfulness of the subsidy schemes, following a request from Jim Anderton.

"If the big oil companies have spare cash available to help their retailers match the prices charged by competitors, then they should use it to bring down prices so that all motorists can benefit.

"One of the problems with the scheme is that it is a disincentive to retailers to lower their prices on a competitive basis. Retailers thinking of reducing prices face having their compettors subsidised to match them, so they all they are doing is losing revenue themselves while their competitors are being subsidised to maintain reveneue. It removes the incentive to compete on price," Jim Anderton said.


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