Commerce Commission warns fuel retailers it's watching as oil price falls

12:45 pm today

Fuel surcharges might also need to be reassessed, the Commerce Commission said.

Photo: 123rf

Oil prices are falling and the Commerce Commission is reminding petrol companies that fuel prices should too.

Commissioner Bryan Chapple said it was reasonable for businesses to adjust their prices in response to higher and more volatile global wholesale prices but adjustments should also be made when prices came down.

"We just want to remind fuel companies that as we said when fuel prices were going up that we would be looking at things when they come down, and we're assuming that their costs of imported fuel will start declining, so we're monitoring that.

"It's been a difficult period for many consumers and businesses as we've felt the flow-on effects from the conflict in the Middle East. Now that we're seeing some stability in the region, we expect this will lead to lower imported fuel costs and we want to see that reflected in the prices consumers are paying.

"We expect to see decreases in global costs passed through to prices at the pump in the same way the increases have been. We've made this expectation clear to the fuel companies and will be continuing our weekly monitoring of prices so we can call out any behaviour that is cause for concern."

He said businesses that had added fuel surcharges or fuel adjustment factors (FAFs) when prices rose might also need to reassess those.

Placing or increasing a fuel surcharge on a product or service was legal as long as the business was transparent and upfront about what it was and what it was for.

"As fuel costs go down we expect any surcharge or fuel adjustment factor to reflect this reduction in cost. While surcharges and FAFs may not immediately disappear, they can't be used as an excuse to recover unrelated expenses or to increase margins."

There has been criticism of "rocket and feather" pricing in the fuel sector, where prices rose quickly but fell slowly.

Chapple said it was something that had happened in the past. "We conducted a study on that a few years ago to show that it occurred. We haven't seen evidence of that since then."

He said the market was more competitive as a result of reforms that came into force in 2021 and 2022.

"The reforms helped free up the wholesale market in particular so that makes it easier for companies such as Waitomo or NPD that don't import their own fuel directly to be able to access that fuel, and then that allows them to expand and compete with the major companies who are the fuel importers."

The Commerce Commission cannot set fuel prices and does not have regulatory power to control them. But the Fair Trading Act prohibits misleading or deceptive conduct and false representations.

The commission said if it had concerns about non-compliance, it could investigate.

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