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Shell Sets Record Straight On Competition Issues

Release: Shell New Zealand

Shell New Zealand says Deputy Prime Minister, Jim Anderton's attack on the competitive nature of the oil business is bewildering, but it is happy to explain how competition is working.

Shell Retail Marketing Manager, Steve Foster, says low petrol prices in some New Zealand hotspots are tangible proof of competition at work.

"It is interesting, when you look at pricing in Hewletts Road at Mount Maunganui over December and January, to note how often Gull had the lowest prices. Indeed the pricing is unsustainable in the long term, and Shell during this period attempted to lift prices three times with no success. Gull in particular, never lifted its prices over and above general movements. In these periods when Shell's prices were higher than its competitors, we were losing sales at an alarming 30-40 per cent. We have therefore had to follow market prices which have been largely dictated by Gull. If this isn't a real market in action, we don't know what is. Shell has in recent months been left with no alternative but to follow market led prices in that area."

Mr Foster says the Commerce Commission is welcome to investigate its business anytime, but points out that an investigation was completed as recently as December last year.

"That inquiry into petrol pricing from July to November 1999 `failed to indicate behaviour that would amount to a breach of the Act.'

"In addition, the Ministry of Commerce produces an Energy Data file every six months, and this keeps all relevant parties fully apprised of petrol price movements. It is interesting to note in the latest January release it reveals that oil company margins have been consistently decreasing since 1996 in real terms."

Shell says high petrol prices are directly attributable to two key factors:

*The high costs of crude oil, which has nearly trebled since 1999. *The weakening of the New Zealand dollar which has depreciated by 12% since May 1999. This alone is adding 6.5 cents a litre to pump prices.

Shell has requested to meet with Mr Anderton and his officials to explain and clarify these issues in more detail, and hopes to do so in the next few days.

Ends

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