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Rising fuel prices a mystery

By Jake Beleski

[email protected]

The “Gull effect” continues to have an impact on petrol prices around the country, leading to the possibility of an investigation into the rising prices.

Energy Minister Judith Collins suggested yesterday an investigation might be needed to get to the bottom of the issue.

The term “Gull effect” was coined by the Automobile Association in 2013 in response to a localised price drop trend across competitors following Gull’s arrival into a new location.

But AA spokesperson Mark Stockdale said they were calling for fuel companies to explain why the national price of fuel rose five cents per litre in January, despite no price increase in the commodity or a drop in the exchange rate.

“Normally retail prices rise following an increase in the cost of importing fuel, but that wasn’t the case in January.

“While commodity prices did rise in December, they have since fallen slightly while the New Zealand dollar has strengthened by over three cents.”

If anything, prices should have fallen, not risen, and motorists deserved an explanation, he said.

He identified the Gull effect as a potential reason for the price hike.

“The AA suspects the rise in the national price — excluding any discount — is to help cover the cost of selling fuel at substantially lower prices elsewhere, and we’d like the fuel companies to confirm that.”

Gull’s prices in Masterton yesterday were $1.89 per litre of 91, and $1.19 per litre of diesel.

At BP you could get a litre of 91 for $1.91, and the same amount of diesel for $1.26.

Challenge in Greytown and Gasoline Alley in Carterton were offering 91 at $1.94 per litre, and diesel at $1.26.

Mobil in Featherston had 91 at $1.94 and diesel at $1.25.

But spare a thought for motorists in Wellington, where 91 was $2.08 per litre at BP in Karori (diesel $1.38), and Mobil Karori had it at $2.06 (diesel $1.36).

A Gull spokesperson said Wellington’s motorists were an unlucky bunch.

“That’s the great thing about competition, everybody comes down in that area — it’s not just one party.

“It’s just a shame for the people of Wellington that they have to pay that high a price.”

He said there was a simple explanation behind Gull’s ability to keep its prices down, and that came down to them being the “small player” in a big field.

“We think about how we bring the fuel into New Zealand and also the type of office we’re based at in Auckland.

“The other thing is we know what’s important to the motorists, we know fuel prices are important, and that’s how we treat our business.”

1 COMMENT

  1. There is likely no mystery. All refined fuels are imported. The retailing is highly-concentrated (a few firms dominate the petrol market). Pricing can therefore be administered to a level the consuming public is ‘willing’ to pay. The benchmark light-crudes (W. Texas & Brent) have ‘crashed’ from $120= barrel (since 2008 GFC) and continue to ‘hover’ at $US55=. As has also been pointed-out (AA) the $NZ exchange-rate has been persistently high in relation to both $US & $AU. So, as with most other imports the $NZ price has been steadily-falling for over 5 years. Suggest NZ Commerce Commission might need to look at this, and fast.

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