The Commerce Commission's first report on the performance of New Zealand’s $10 billion fuel market showed encouraging signs of competition. The initial analysis ended on June 30 2022, highlighting that discounting strategies do not always represent the lowest price and that customers should shop around.
“In some cases, you can get a better deal simply by crossing the road to another petrol station. Kiwi motorists have a choice, and we encourage shopping around for the best deal before filling up your tank,” said John Small, Commissioner.
Dr Small noted that fuel currently accounts for about half of annual household energy costs, and on average most importers' retail sites were not offering the lowest price. In some cases, retailers without discount programmes offered the lowest.
On average, importer margins were 32 percent lower on diesel and 27 percent lower on 91 compared to 2018 margins. These drops are a positive indicator that competition has intensified already.
“We expect to build a more robust picture of how competition is evolving over time as more data becomes available and is published in future reports.”
Information based on the wholesale market shows that it remains almost entirely based on contractual sales, with Terminal Gate Price (TGP) sales accounting for only 0.01 percent of all wholesale trade. This indicates that a liquid wholesale spot market has not yet developed, although there are positive signs TGP prices are being used as a reference point. Our initial review of wholesale contracts has found that at least one-quarter of contracts do contain clauses which incorporate TGP as part of a pricing methodology.
“There appears to be large differences between New Zealand terminal Gate Prices and those in Australia and also between Terminal Gate Prices here and wholesale contract prices.”
The Commission intends to undertake further analysis of prices and discounts at the local and regional levels.
