Watch Energy and Resources Minister Megan Woods make the announcement here:
The government is giving the Commerce Commission the power to set fairer petrol and diesel prices.
It is part of a suite of measures aimed at making the country's fuel system more secure and affordable.
Wholesale fuel suppliers selling from terminals are currently required to share a daily spot price.
But from mid-next year the Commerce Commission will be able to regulate that cost if the prices on offer are too high.
Energy and Resources Minister Megan Woods, announcing the changes this morning, said the country was moving into more resilience for its fuel stock supplies in a post-Marsden Point situation.
Fuel importers and wholesalers with on-shore storage facilities would be required to hold at least 28 days supply of petrol, 24 days of jet fuel and 21 days of diesel on a three-month rolling average. The government will also procure 70 million litres of diesel stock, roughly an average of seven days supply for the country.
These supplies were similar to what the country held before Marsden Point cut back its operations, Woods said, and would help protect against disruptions like economic shocks, natural disasters and infrastructure failures.
Regarding biofuels, the fuel industry is being allowed another year to successfully deploy sustainable fuels with the date being shifted to 1 April 2024.
Woods said the government was recognising tough economic times and did not want people to incur any extra costs from biofuels.
The delay would allow the industry extra time to get infrastructure in place and source appropriate fuel stocks to meet its requirements.
A third element was progress on the regulatory backstop, with the Commerce Commission being able to step in and make sure motorists got fair prices at the pump, Woods said.
Since legislation was introduced in 2020, fuel companies' profit margins have dropped. Previously at 33 cents per litre, for the weekend of 4 November they dropped to about 17 cents per litre, Woods said.
"So we have seen a decline in those margins for the fuel companies."
The changes already in effect enabled the government to track profit margins, she said, and it was now time to enable the Commerce Commission to set prices if they considered they were excessive.
She said prices were being driven by international supply, but the market here had to be transparent and competitive.
'We don't have a single source of failure'
The policies being announced today have been worked on since Refining NZ decided to close Marsden Point. Woods was confident the new measures would ensure the country had either the same or a higher level of fuel resilience than when Marsden Point was operating.
Now that the country had moved to a finished fuel product, Woods said "we don't have a single source of failure any more ... with us importing finished product we have more destinations that the fuel is coming from".
Terminal gate pricing has been in operation since the government's fuel study. It is the requirement for wholesale prices from the terminals to be advertised, which has allowed more operators to move into the market, especially in the South Island.
With today's announcement, the Commerce Commission now has the power to step in if it sees anticompetitive behaviour or market power being exerted. It can investigate or the minister can ask it to see if this behaviour is occurring.
"If they found anticompetitive behaviour was occurring they would have the power to set a fair price," Woods said.
Transparency has resulted in lower margins on fuel and has acted as a protection for consumers, Woods said. She did not expect fuel companies would want to be investigated.
A Commerce Commission official said such investigations could take up to 12 months.
"This is a new power [for the Commerce Commission]. This is something that hasn't existed and certainly will be a key lever that is there to protect consumers to ensure that competitive pricing is occurring."
Fuel prices had been monitored closely to ensure the government's 25-cents-a-litre saving in excise was being passed on to motorists, Woods said.
Since the fuel market study, small operators like Waitomo and NPD had moved into the South Island where prices had previously been higher, she said.
'Greater choices for consumers'
"These improvements will pave the way for a more stable, low-emissions fuel supply, greater choices for consumers, and a more competitive wholesale fuel market with the power for the Commerce Commission to regulate prices, if required," Woods said.
"We know many households are struggling with the increased cost of living, so we are pulling back on any potential extra costs on consumers as a result of the biofuels obligation.
"This supports a range of actions we have taken to ease the pressure on families, alongside the extension to our fuel tax cut, reduced road user charges and half-price public transport until January 2023."