Petrol market about to become more competitive, Waitomo and NPD predict
Motorists may finally be about to see some benefits from the Commerce Commission’s market study into the petrol industry, independent petrol companies say as they expand their North Island networks.
The market study was the first the commission undertook using new regulatory powers it gained in 2018 and has been widely perceived to have delivered few tangible gains for motorists to date.
A rule requiring petrol stations to advertise the price of “premium fuels” on their roadside signs is not due to come into effect until February and where signage had been installed ahead of the deadline it seems to be having little effect on high mark-ups that the AA says should be no more than 10 cents a litre.
But another rule that requires the oil majors to advertise a wholesale spot market price for fuel comes into effect on Thursday.
More importantly, independent chains will get more freedom to change suppliers if they are locked into fuel supply contracts.
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Waitomo managing director Jimmy Ormsby expected the changes mandated by the Fuel Industry Act that take effect on Thursday would stimulate more competition, but said they were “not going to be an overnight silver bullet”.
The rule changes meant companies such as Waitomo would find it easier to shop around for fuel and that had already led to some approaches from alternative suppliers, he said.
“I think the landscape has changed and it will create more competition.”
BP and Gull have begun advertising “terminal gate” spot prices for fuel ahead of Thursday’s deadline.
Gull is advertising fuel for pick up from its Mount Maunganui terminal today at a price of just under $2.18 a litre for 91 and just over $2.27 a litre of 95.
BP’s prices at its Marsden Point terminal on Friday were a couple of cents higher.
Those prices are for a minimum order of 5000 litres of fuel – if wholesalers bring their own tanker to pick it up.
Ormsby said that even though Waitomo bought fuel on longer-term contracts, the option of buying some fuel on a spot market might be useful from time to time.
Waitomo currently operates about 50 petrol stations with two more under construction in Masterton and Petone, and Ormsby expected its network would grow to more than 60 outlets within a year.
Barry Sheridan, chief executive of independent chain NPD, said it had not found it easier to do business following the completion of the market study, as yet.
“However we are expecting to see some favourable benefits for motorists at the pump as we enter a new ‘multi-supplier’, competitive market environment,” he said.
Sheridan said he also expected the closure of the Marsden Point oil refinery and Refining NZ’s switch to importing pre-refined fuels to benefit motorists with “reductions in product costs at the pump”.
The Commerce Commission said in its fuel market study that competition from Nelson-based NPD appeared to have the most impact on the oil majors' prices and there was less evidence that sites operated by Gull, Allied and GAS acted as a constraint.
The vast majority of NPD’s 96 petrol stations are in the South Island, but it has opened four in the North Island in June with another five scheduled to open before Christmas, including one in Wiri and another in Pukekohe.
“When we opened our new NPD self serve sites we witnessed some positive North Island pump price reductions in many locations prior to and as we commenced pumping,” Sheridan said.