Hon Judith Collins

Minister of Energy and Resources
24 February 2017

Terms of Reference into Fuel Price Inquiry released

The Terms of Reference for the Fuel market Financial Performance Study Energy have been released today, says Energy and Resources Minister Judith Collins.

The Study, being undertaken by the Ministry of Business, Innovation and Employment, will take an in depth look at fuel company finances to determine if the price New Zealanders are paying at the pump is reasonable.

“Petrol and diesel are fundamental to New Zealander households and businesses and I am concerned that the difference between what fuel is imported and sold for (fuel margins) has steadily increasing over a number of years.

“We need to know why this is happening and determine if what people are paying at the pump is reasonable or whether companies are making super-normal profits.

“This study will offer new insights into our fuel sector and help us understand if there is an issue and, if there is, show where we need to focus to address it.

The Fuel Market Financial Performance Study will look specifically at returns on capital employed of the major businesses at different parts of the value chain. These returns will then be assessed against an appropriate cost of capital and compared with fuel suppliers in other countries.

The Study will also consider margins and other market performance measures as another way of providing insight into industry profitability.

“This is a technical study but I do expect some observations to be made about regional price differences.

“I am pleased that the companies involved – Z Energy, BP, Mobil and Gull – have all said that they will co-operate with MBIE. The companies were also consulted on the Terms of Reference,” Ms Collins says.

The Fuel Market Financial Performance Study is expected to be completed by June.

http://img.scoop.co.nz/media/pdfs/1702/TORfuelpriceinquiry.pdf

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