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Moves to make wholesale fuel prices more transparent, supplier/distributor contracts fairer, and retail premium petrol prices clearer are now taking effect

Moves to make wholesale fuel prices more transparent, supplier/distributor contracts fairer, and retail premium petrol prices clearer are now taking effect
10th Aug 21, 8:55am by David Hargreaves

A new regulatory regime designed to enhance wholesale competition in New Zealand’s fuel markets is coming into effect.

A key feature is introduction of a terminal gate pricing (TGP) regime, similar to that in Australia.

A TGP is a spot price at which wholesale suppliers will sell fuel to wholesale customers at storage terminals. This price will act as a benchmark for wholesale customers negotiating supply agreements.

The introduction of a TGP was one of the key recommendations made by the Commerce Commission following a year-long fuel market study it was instructed to do by the Government.

The Wednesday, August 11 start date for the regime follows the passing of the Fuel Industry Act 2020.

The Commerce Commission, which has a monitoring and enforcement role under the Act, says its staff have been meeting in recent weeks with businesses in the fuel sector to help them understand their obligations and rights under the new rules before the regime goes live.

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The features of the Act that will affect businesses in the fuel industry are:

  • Terminal gate pricing – Wholesale fuel suppliers must publish a spot price for their fuel at storage terminals and are generally required to sell fuel to any wholesale customers that want it at that price, even if they’re competitors.
  • Wholesale contract rules – These will limit the use of restrictive terms in wholesale contracts, freeing up wholesale customers like distributors and petrol stations to shop around for the best deal to meet their needs.
  • Dispute resolution – The Act provides a process for wholesale fuel suppliers and their wholesale customers to resolve disputes about wholesale contracts and terminal gate price rules.

Under additional rules that are scheduled to take effect from February 2022, petrol stations will have to display the standard prices of all fuels they sell on price boards. Fuel businesses will also need to disclose key information to the Commission to help it monitor and report how competition in fuel markets is evolving.

The Commission can seek court-imposed penalties of up to $5 million if fuel businesses do not comply with these new rules.

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12 Comments

by  Chris-M  |  10th Aug 21, 9:37am 1628545067

I think that the government should have taken an antitrust type approach with the fuel supplier cartel and required them each to divest a chunk of their petrol stations to independent operators or groupings of independent operators.

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by  Squishy  |  10th Aug 21, 11:04am 1628550251
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by  CWBW  |  10th Aug 21, 11:15am 1628550910

The government is the greatest cartel.

It sets fuel tax unilaterally.
It does not provide the public it's tax rate bench-marked against other nations on per capita income basis for comparison.
It charges GST on top of the fuel tax to double tax the consumer.
It does not provide the public details on the flow of the tax collected end to end- thereby giving no clarity on where the tax money is actually being spent on- relying on the public that the money is spent as they said.
It does not explain the rationale behind the tax rate and provide evidence of its effectiveness of their said goals in taxation.

The commerce commission should investigate the government instead.

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by  Carlos67  |  10th Aug 21, 11:41am 1628552463

Yes the government make more money out of the sale of petrol than anyone else. Look at the logistics involved getting it from out of the ground and finally into your gas tank. The government clips the ticket for doing absolutely nothing, 100% profit on that thanks ka-ching.

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by  JimboJones  |  10th Aug 21, 12:11pm 1628554293

What a strange comment! You don't drive on roads? Or do you think it is cheap and easy to build and maintain an entire country's roads? To me the fuel supply logistics actually seems easier than what the government does!

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by  JimboJones  |  10th Aug 21, 12:08pm 1628554134

How could it benchmark its tax rate against other nations, considering some other countries pay for roads solely from general tax and some only pay via fuel tax. We are somewhere in between - our roads are paid for by fuel tax (the National Land Transport Fund), general taxes (such as the governments $12 billion spend up), and about 50% of local roads are paid for by rates.
As for the "double tax", its not really a double tax as the initial tax goes solely towards paying for a service (building roads), and as such it should incur GST just like when you pay for any other service.

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by  GV 27  |  10th Aug 21, 12:34pm 1628555657

It's not really a double tax except it literally is that.

I wouldn't care if badly needed infrastructure in Auckland wasn't languishing after spending three years bouncing around Wellington desks with no accountability, while more and more people kept getting added at record levels until Covid came along.

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by  JimboJones  |  10th Aug 21, 12:43pm 1628556211

Well it pretty much all goes the the NLTF / Waka Kotahi. If they split Waka Kotahi off as an SOE would you still call it a double tax? Either way it is much more efficient / simple / fair to charge GST on everything; imagine a business having to deduct fuel excise from their GST receipts for example.
I think the only projects bouncing around Wellington are the ones that aren't funded. That is because fuel tax isn't set high enough to cover everything that needs to get built.

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by  GV 27  |  11th Aug 21, 8:30am 1628627418

The last discussion I saw was that the fuel tax has not been paid out anywhere as fast as it has been collected. So there is a legitimate question as to why Auckland is a) the only region paying a fuel tax, and b) why are projects like the Eastern Busway being deferred for years if half the fuel tax hasn't been spent yet as reported here:

https://www.nzherald.co.nz/nz/half-of-auckland-councils-regional-fuel-t…

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by  WestieAJ  |  10th Aug 21, 12:26pm 1628555162

Todays TGP for 5000 ltrs 91 ex Wiri Terminal (you need to pick it up in your own tanker) $2.29 ltr including AKL Fuel levy.It makes this whole exercise a waste of time. There a are multiple fuel stations in Auckland retailing 91 for under $2.29 today.

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by  GV 27  |  10th Aug 21, 12:32pm 1628555534

Jesus I can get that by having a free promotional supermarket points club card. Is that the extent of the response to the idea that "we're getting fleeced"?

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by  pankers  |  10th Aug 21, 4:48pm 1628570892

This has already happened -NPD started and Gull/Waitomo is here Christchurch
We have had cheapest price for some time but the Petrol companies as of today have pushed them way up including Gull, think there is 6-8 cent difference between BP and Gull

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