Petrol Competition Important To Economy

  • Max Bradford

Reports of new competition in New Zealand's petrol market is excellent news for consumers and for the economy, Energy Minister Max Bradford said today.

The entry of new players into petrol retailing and distribution would provide the established oil majors with more incentive to seek and offer the best prices, Mr Bradford said.

"A fully functioning, competitive oil market is one my objectives as Minister of Energy. Competition is vital in such an important part of the economy."

Two major reports this year have highlighted concern about petrol prices and competition in the New Zealand oil market.

Recently the International Energy Agency found New Zealand's pre-tax petrol prices offered by the four major oil companies were among the highest in the OECD.

A report from the New Zealand Institute of Economic Research early this year also raised concern about petrol pricing when it analysed price margins over the last decade and suggested that the gains from deregulation have been lost.

Mr Bradford said he had commissioned an Australian company to study the barriers to entry into the distribution and sales market in New Zealand.

"By the end of this month I expect to have a full report identifying what is making it difficult for new competitors to enter the distribution and sales market."

The data in that report would determine the Government's approach to encouraging new entrants into petrol retailing and removing barriers to entry.

Mr Bradford said he was still keen to see retail chains move into petrol sales as is happening in Britain, France and Australia.

"Supermarkets' share of petrol sales in the United Kingdom has increased rapidly in recent years, to over 20% of the market. In Australia, Woolworths now has seven supermarket sites selling petrol with plans for 40 by the end of the year."