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.
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