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Govt to improve monitoring of petrol pricing


Hon Lianne Dalziel
Minister of Commerce

7 August 2008 Media Statement
Embargoed until 12.30pm today

Govt to improve monitoring of petrol pricing

Commerce Minister Lianne Dalziel today released an independent study of petrol pricing in New Zealand.

The study built on work carried out as part of an Australian Competition and Consumer Commission (ACCC) report on the price of unleaded petrol, and considered implications for the New Zealand market.

"New Zealand is not alone in its experience of rapidly increasing petrol prices, but it was right to check the market in New Zealand has been operating effectively. In New Zealand there has been confusing volatility in the price of petrol, so the government is going to increase monitoring in order to further improve the transparency of pricing."

Lianne Dalziel said the report showed that public perceptions that petrol prices had been fast to rise but slow to fall were just perceptions, no doubt affected by media reporting of increases.

"In fact the rise and fall in petrol prices mirror changes in offshore drivers, such as the price of crude, the value of the US dollar, as well as simple supply and demand which all impact on the price at the pump here.

"I certainly think that in recent times, probably thanks to pressure from the public and interest groups such as the AA, oil companies have got better at explaining price rises to the public."

The key findings of the review*, which focuses on petrol only and not diesel, are:

• The New Zealand petrol market is fundamentally competitive.
• Retail petrol prices are not fast to rise and slow to fall.
• Recent price rises are mainly due to increases in crude oil prices overseas.
• A Fuelwatch scheme like Australia’s wouldn’t benefit consumers, because our market works differently.
• More transparency about the makeup of importer margins and a move to report daily margin movements would be useful for consumers.

The review confirms the reality that petrol prices are set according to the international marketplace – 85 per cent of the price increase between January 2007 and June 2008 were due to offshore increases in crude oil prices. New Zealand has the fifth lowest petrol prices including taxes in the OECD and, unlike Australia, is ploughing all the fuel excise directly back into transport.
The report also shows that there is scope for more transparency about the makeup of importer margins - the difference between the retail price (less taxes and duties) and the landed cost of the refined product.

"This is an area where we can offer better information for consumers. We are currently working with officials towards this," Lianne Dalziel said.

The government has been working to ease the pressure of petrol prices on family budgets on several fronts, such as diversifying our sources of transport fuels and vehicle technologies, improving vehicle efficiency, changing driver behaviour and improving public transport.


• The Hale & Twomey report, commissioned by the Ministry of Economic Development (MED) is available on the MED website: www.med.govt.nz/nzpetrolreview


Weekly petrol price data are linked from www.med.govt.nz.

ENDS

petrolfacts.pdf
Hale_and_Twomey_Petrol_Price_Review.pdf

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