The Commerce Commission has been directed to use its new powers to find out if New Zealanders are being fleeced at the pump.
Fuel pump. Photo: RNZ / Alexander Robertson
Prime Minister Jacinda Ardern has announced the terms of reference for her government's promised fuel market study, which will take a year to complete.
It follows the passing of legislation that enables the Commerce Commission to get financial and market-specific information from private companies, if it's doing a competition study.
Ms Ardern said it's "simply not acceptable" that she is unable to say with any certainty that New Zealanders are paying a fair price for fuel.
"As you will recall I expressed my concern in early November about the price of petrol and the impact this was having on household budgets."
The retail fuel market will be the first Commerce Commission market study, Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi have announced. Photo: RNZ / Rebekah Parsons-King
Ms Ardern said they could not control the international price of petrol, which drives prices up in cases like the spike seen recently, but they could ensure there was good competition locally.
The government's concerns were around margins and pricing variability, Ms Ardern said.
"My concern around transparency and competition in the petrol market still stands, which is why this study is so important. We do need definitive answers."
Ms Ardern said she would have preferred the study to have been done more quickly, but has given the Commerce Commission a year based on its advice that it will need the time to do a thorough job of the inquiry.
Petrol price psychology 101
Commerce and Consumer Affairs Minister Kris Faafoi added a former market study done under the previous government was inconclusive, in large part because there was no obligation for fuel companies to be involved.
He said there were good reasons to launch this study straight away.
"Petrol and diesel margins more than doubling over the past decade. A significant difference in the price of fuel across the country that cannot be explained by transportation costs with greater variations in price occurring over the past 10 years."
Ms Ardern said New Zealand was now considered one of the most expensive places to buy petrol in the OECD.
This assessment by the International Energy Agency in itself was cause for concern, she said, because NZ used to have one of the lowest pre-tax petrol prices.