Is it time to crush the fuel companies?

MP Judith Collins

Judith Collins crushed boy-racers, you hardly hear anything about them anymore.

She has now set her sights on the fuel companies. Richard Harman at Politik reports:

Energy Minister Judith Collins get-tough approach to fuel pricing may already be getting results.

Collins told POLITIK last night that over the last three weeks some companies had reduced their margins by 10c a litre.

She said that if that were carried through for the whole year, it would result in $300 million staying in the pockets of Kiwi motorists.  

That reduction comes as a report, commissioned by Collins, has revealed that margins in New Zealand at over 20c a litre are the highest in the OECD.

Now the Minister is saying that unless the fuel companies reduce their margins permanently and allow more competition her ultimate response might be to use the about-to-be-granted powers that the Commerce Commission will have to investigate the petrol market and if necessary impose a solution.

That solution could go as far as price regulation such as is already imposed by the Commission on the electricity lines companies and gas industry.

In my experience when Judith suggests a course of action it is wise to take that course of action.

The Minister was responding to a Ministry of Business Innovation and Employment study of the fuel market that she had ordered.

The report found that average retail gross margins had significantly increased from 2013-2017.

“On a cents per litre basis, average retail gross margins have increased from approximately 13.0 cents per litre in the financial year (FY) 2013 to 21.3 cents per litre in FY2017,” she reported in a Cabinet paper based on the study.

However the AA warned on 21 June that the recent price drop was “another unexpected price reduction and atypical behaviour by the fuel companies which only reinforces the AA’s view that they want margins to look a lot lower than what the pending government study will report on, perhaps to undermine the credibility of the data in that report?”

Collins says that when she started the study, she suggested the companies might like to look at the issue themselves.

“Clearly they didn’t until the last three weeks.”.

The companies have been putting up a tough fight.

Collins told POLITIK that only two of the four investigated by MBIE had provided all the information requested.

“When we started the study all four of the companies said they would provide us with everything that we needed and two of them did, and two of them provided us with most of what we needed but not everything,” she said

Uh oh. Bad mistake by the fuel companies there.

 

If Judith really does set her sights on them then they will lose. Lawmakers always win when they can change the law.

 

-Politik


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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