Government acts on fuel market competition

3 MinutesBy NZ Trucking magazineFebruary 28, 2020

The Government has released a comprehensive response to ensuring New Zealanders get a fairer deal at the petrol pump.

This follows the Commerce Commission fuel market study that found motorists were paying more than they should for petrol and includes:

  • Fuel Market Bill drafting, to pass mid-year

  • Industry consultation in coming weeks on proposed regulations

  • Further work into longer-term Commerce Commission recommendations

  • Letters from ministers to fuel companies urging them to take pre-emptive action

“The action the Government is taking in response to the commission‘s report forms a package of solutions to deal with entrenched problems that have been around since the 1980s,” Energy Minister Megan Woods said.

“Since the report‘s release in December, we‘ve moved quickly to act on the commission‘s recommendations. We‘re introducing changes that will promote greater competition in the fuel market at the wholesale level and lead to lower prices on the forecourt for motorists,” Energy Minister Megan Woods said.

“We know that the cost of fuel is significant for households and businesses. The Government is giving this Bill priority and we will pass it into law later this year.”

The commission‘s report found that companies were making high profits due to a lack of competition in the industry, and Woods said the report confirmed the Government‘s concerns that motorists were paying higher prices for petrol and diesel than could be expected in a competitive market.

Woods said the Government‘s focus on making changes at the wholesale level would see smaller players such as Waitomo and Gull gain access to cheaper fuel. This will mean other retailers will need to adjust their prices or risk losing customers.

“Cumulatively, the suite of measures we‘re introducing will mean competition can begin to flourish, and the benefits will filter down to consumers,” Woods said.

She has written to fuel companies asking them to consider the commission‘s recommendations around shared infrastructure and report back by 30 March.

Regulatory changes in the Fuel Market Bill currently being drafted include:

  • a more transparent wholesale pricing regime requiring fuel suppliers to publicly post the prices they sell to wholesale customers at storage terminals

  • rules to ensure contracts between wholesale fuel suppliers and their customers are fair and support competition

  • providing a dispute resolution scheme for the new regime 

  • improvements to the monitoring of the fuel market by requiring fuel companies to collect and disclose certain information 

  • requiring retail fuel sites to display premium fuel prices on forecourt price boards.

More information about the market study into retail fuel (including the Cabinet paper and letters to the fuel companies) is available here: