New Zealand Regulator Recommends Market Changes to Cut Gasoline Prices
December 04 2019 - 11:53PM
Dow Jones News
By Stephen Wright
WELLINGTON, New Zealand--New Zealand consumers are paying too
much for gasoline, the country's competition regulator said
Thursday, recommending changes that could lower prices.
Government ministers said they agreed with the Commerce
Commission's findings and are ready to act on its
recommendations.
The commission's study of the retail-fuel market found that over
the past decade companies have made higher profits than would be
expected if the market had been "workably" competitive.
"For consumers, this means they are paying higher pump prices,"
said Anna Rawlings, the commission's chief.
The regulator found that loyalty schemes are being used to avoid
direct competition and an increasing difference between profit
margins on regular and premium fuels that aren't explained by cost
differences.
Taxes make up about 45% of the cost of gasoline at the pump in
New Zealand. Importers' profit margins on retail fuels are about
18% for diesel and between 12%-15% for different grades of
gasoline.
Among the several proposed changes is that New Zealand adopt a
system used in Australia whereby fuel importers are required to
offer a spot price at which to sell fuel to wholesale
customers.
New Zealand's lack of a wholesale fuel market is the underlying
reason for high retail gasoline prices, the regulator said.
The major fuel companies in New Zealand--Z Energy Ltd. (ZEL.NZ),
BP PLC (BP.LN) and Exxon Mobil Corp. (XOM)--share infrastructure
that includes the country's only oil refinery and supply 90% of the
country's fuel through their retail gas stations.
The proposed changes will increase competition by allowing a
spot wholesale market to develop and by lowering barriers to
entering the industry, the commission said.
Write to Stephen Wright at stephen.wright@wsj.com
(END) Dow Jones Newswires
December 04, 2019 23:38 ET (04:38 GMT)
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