No-one befogged by a flair for fancy footwork and cries of foul over fuel ‘fleecing’

PM Jacinda Ardern  reckons consumers are   being “fleeced”  at the petrol pump.  She  blames the big petrol  companies  and says the government  will  rush legislation  through Parliament.

To do what?   You guessed  it:  to gather data for another study.

She is aiming to get the  Commerce  Commission to  “investigate” the  margins  on  fuel  and  present a  report next year.

And where   will the  petrol  price   be  by then?   That’s  anybody’s guess,

But  given the  trend in   international  crude  oil prices, which  have risen  from  around  $US50  a  barrel  to  $US86  (for Brent crude)  in  the past  six months , a period in which the  NZ  dollar has fallen 12%  against the the US dollar , they’ll almost certainly  be  higher.

If the government  really believes  consumers are  being  “fleeced” ,  why  isn’t it  acting now to  bring prices down?

Or  was  the   PM   just  using the phrase  during some posturing intended to  persuade consumers  the  government  is on  their side?

Z Energy  insists  it has had no increase in its petrol margins over the past year and    its CEO  Mike Bennett says   the company welcomes a full Commerce Commission market study.

So  if  the ComCom  study  shows  margins  are  not  unreal, who  would  be the  guilty  party    “fleecing”  consumers?  Surely  not the government  with its  swingeing  $1.25  or so   from every litre of  petrol sold?

The PM’s tap dance over petrol prices   at her  Monday  press conference was notable essentially for suggesting she can give Theresa May, The Dancing Queen of UK politics, a run for her money in the headline-grabbing business.

Perhaps her advisers thought petrol resellers would be beguiled into calling a halt to further  price increases.  Or it might have been designed to  defuse  the   rising anger  among consumers.

Whatever the merits of the PM demonstrating a flair for fancy footwork, beyond the spotlight and out in the world of reality consumers  have yet  to  absorb   the  secondary  effects  of the  rise  in petrol  prices.

The  ANZ  Bank’s economists, in their  weekly   summary,  pointed  to the  impact  on the CPI  which they expect will increase above the RBNZ’s 2% mid-point target early next year before moderating. They  note the inflationary impact of petrol price increases tends to be transitory and say the RBNZ will look through it.

“However, growth impacts matter too. Higher petrol prices will boost costs for already downbeat businesses, and it will also squeeze the discretionary purchasing power of households.  Households lack savings buffers to absorb unexpected events – be that something as dramatic as job loss or as everyday as petrol price movements. Given businesses are already downbeat, a spooked consumer to boot could make quite a dent in the economic outlook”.

The  Commerce  Commission  is  expected to  report back  next year  and Ardern  says  she will “prioritise a response to it”.  

“I am hugely concerned at the level of price that consumers are currently paying at the pump for fuel.  In 2008 we had one of the lowest pre-tax costs for fuel in the OECD. Today we have the highest in the OECD.“

National leader Simon Bridges described the  PM’s move as “yet another inquiry” and called on the government to axe its fuel tax increases.

“She’s saying consumers are being ‘fleeced’ while her government is driving up fuel prices and taking hundreds of dollars from Kiwi households through higher taxes on fuel.”

 Point of Order  thinks   Hamish Rutherford  got it  right   in  Stuff   when he wrote:

“If Ardern is already convinced that a rort is taking place and Energy Minister Megan Woods believes the market is ‘broken’ as she said in May, why are they bothering to investigate?  Not only is the government  putting immense pressure on the independent competition regulator to give it the answer it wants, Ardern may be stalling for time because her government does not know what it will do to fix the problem.

“If Ardern thinks public or political pressure on the fuel industry will make a difference, she is likely to be disappointed”.

Rutherford  saw rich irony in the government’s urgency.

“Ardern has described climate change as NZ’s ‘nuclear free moment’.  Her government has seen fit to crack down on the oil exploration industry, ending new offshore permits, purportedly as a means to take action.

“The reason the climate is warming is not because fossil fuels are being extracted, it is because people are burning them. If Ardern was really serious about tackling the issue, surely she would do something about demand.”

Setting aside the matter of whether the petrol companies are making too much profit, Rutherford ventured,

” … the best way to get Kiwis to drive less is by ensuring they pay more.”

But on Monday, he tartly observed, Ardern’s ‘moral stance’ was that Kiwis are paying too much to do the very thing she surely believes threatens the planet.