No easy solution to petrol prices

EDITORIAL

Few things are as likey to get kiwi’s blood boiling than petrol prices as the present furore shows but despite the intervention of Prime Minister Jacinda Ardern there may be no easy solution.

Motorists have been rocked by a steady increase in fuel prices which have gone up a staggering 39 cents a litre in a year.

Ardern entered the debate strongly with a statement that she believed drivers were being “fleeced” by the oil companies.

The government will introduce urgent amendments to the Commerce Act to allow the Commerce Commission to investigate the price of fuel and the margins. Ardern wants to see this done in two weeks.

As a sidebar she also said the government might do something similar with supermarket prices.

Not surprisingly the oil companies are disputing the “fleecing” claims. Gull general manager Dave Bodger told Radio New Zealand this week the market was competitive and prices were fair and there were similar statements from other companies.

Petrol prices are being hit by a perfect storm of a falling New Zealand dollar and rising crude oil prices.

But it also has to be said that government taxes are playing a part.

At the end of last month the fuel tax went up 3.5 cents a litre and further increases are planned for 2019 and 2020. Aucklanders have their 11 cents a litre regional tax also added, a big blow in a city where people have to do a lot of driving.

AA spokesman Mark Stockdale is right when he says motorists are fed up with paying new or increasing taxes when they are already paying a high price for petrol.

Minister of Finance Grant Robertson will have to keep his wallet closed as motorists call for some relief from the 5.5 billion budget surplus.

And National is looking to make political capital out of a bad situation by pointing at the government’s fuel taxes as the main reason for the increase which is only partly true.

This is the sort of thing that can quickly turn people against a government. Ardern must act soon.

Few things are as likey to get kiwi’s blood boiling than petrol prices as the present furore shows but despite the intervention of Prime Minister Jacinda Ardern there may be no easy solution.

Motorists have been rocked by a steady increase in fuel prices which have gone up a staggering 39 cents a litre in a year.

Ardern entered the debate strongly with a statement that she believed drivers were being “fleeced” by the oil companies.

The government will introduce urgent amendments to the Commerce Act to allow the Commerce Commission to investigate the price of fuel and the margins. Ardern wants to see this done in two weeks.

As a sidebar she also said the government might do something similar with supermarket prices.

Not surprisingly the oil companies are disputing the “fleecing” claims. Gull general manager Dave Bodger told Radio New Zealand this week the market was competitive and prices were fair and there were similar statements from other companies.

Petrol prices are being hit by a perfect storm of a falling New Zealand dollar and rising crude oil prices.

But it also has to be said that government taxes are playing a part.

At the end of last month the fuel tax went up 3.5 cents a litre and further increases are planned for 2019 and 2020. Aucklanders have their 11 cents a litre regional tax also added, a big blow in a city where people have to do a lot of driving.

AA spokesman Mark Stockdale is right when he says motorists are fed up with paying new or increasing taxes when they are already paying a high price for petrol.

Minister of Finance Grant Robertson will have to keep his wallet closed as motorists call for some relief from the 5.5 billion budget surplus.

And National is looking to make political capital out of a bad situation by pointing at the government’s fuel taxes as the main reason for the increase which is only partly true.

This is the sort of thing that can quickly turn people against a government. Ardern must act soon.

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John Fricker - 1 year ago
The problem isn't petrol prices, it's government spending. Petrol is a milch cow to revenue gatherers in much of the world. The current gasoline pump price in the US is circa $2.54 per gallon (3.8 litres) and Americans are howling, how would they feel if their government taxed this major driver of the economy to European or NZ levels? In NZ fuel excise and GST (tax on a tax, much like rates) account for 41 percent of the price you pay for your litre. Of course the greenies will think that taxing the backside off petrol is a great idea, but it has serious implications for the economy and everyday life.

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