4 September 2000 Media Statement

Bench-marking would help to sort out petrol profit

A petrol price benchmarking system would make enable the public to judge the fairness of Shell New Zealand's 19% increase in profits to $181 million, Deputy Prime Minister Jim Anderton says.

The profit has been achieved at the same time that oil companies have sharply increased pump prices – but have continued to charge much less in areas where the major companies have competition from the tiny retailer Gull.

Jim Anderton is looking at a petrol price benchmark, which would allow consumers to judge pump prices against a fair industry price.

"It is certainly true that crude prices are higher and that the kiwi dollar is lower than at the start of the year. The issues include the way the oil companies all seem to be able to maintain the same margins, and they all charge exactly the same price unless they face competition from one tiny outsider.

"If they are making record profits because they are good businesses, then they deserve congratulations. If they are making record profits because they have motorists over a barrel, then that's different. A bench-marking system will help to sort out which is which."

When Shell imposed its twentieth price rise in thirteen months on 19 August, it claimed that 'price for oil and finished products are too crippling to sustain.' Increases were beyond Shell's control. They said price increases resulted from skyrocketing prices for crude oil and finished products.

However Shell's 1999 annual review declares the company reaped a profit of $90 million from its exploration and production activities, on top of the $83 million it made form its retail operations.

"It seems that when Shell regretfully blames the higher price of oil and finished products for increasing pump prices, it is also having to regretfully accept much higher profits for supplying itself," Jim Anderton observed.

ENDS

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