Regional fuel taxes could lead to gangs driving a black-market in petrol and have serious and unintended consequences for the region's drivers and fuel businesses, a major fuel retailer claims.

Gull Petroleum general manager Dave Bodger said Auckland Council's plans to tax motorists to help fund transport projects could create a two-tier system where those engaging in illegal distribution will benefit.

He believes criminal gangs could be attracted to the easy profits they'd make by sourcing fuel from outside the region then on-selling it a cheaper rate than petrol companies, which would be forced to hike their prices.

"I hope I don't have to call the police because they have got a hell of a lot of better things to do than handle crazy laws."

The council last month agreed to spend $1.1 million investigating how user-pays road charges and fuel taxes can help the Government raise an outstanding $10-$15 billion needed to pay for future transport projects including the city rail link and a second harbour bridge crossing.

Bodger has made two submissions to council and has met with consultants assessing the viability of the plans.

He said while many large operators such as Gull would obey the law, others would buy drums, infiltrate depots and fill mini tankers to make savings.

"Who are we going to complain to when other operators are bringing illegal fuel in? They are creating a bureaucracy which will bring in lots of money for some. We will comply so we want compliance from everybody otherwise it's an unlevel playing field and we could go out of business."

Bodger believes a "cottage industry" to enforce the proposed fuel tax could suck up a large portion of the tax profits.

Economic consultants believe the fuel tax would work because it would cost motorists up to $5 to drive 25km outside the city to buy cheaper fuel.

Bodger believes that argument is "ridiculous" and is highly sceptical about how petrol providers would be policed.

"Somebody with rocks in their heads has come up with this and I'm quite heated up about it. It's alright to sit in a board room and come up with this but I invite anyone to come to a forecourt and see the lengths people will go to."

Bodger said it was easy to adjust and alter fuel tanks so more fuel could discreetly be carried into the city, a practice that could lead to increased risk of fires and spills.

The Government has already said it opposes fuel taxes.

Bodger said if the tax went ahead, companies like Gull would probably make "stupid investment decisions".

"We'll go out and we'll buy four and five kilometres of land north and south of Auckland because we'll know we'll sell a fortune."

- © Fairfax NZ News