By Stephen Wright 
 

WELLINGTON, New Zealand--New Zealand consumers are paying too much for gasoline, the country's competition regulator said Thursday, recommending changes that could lower prices.

Government ministers said they agreed with the Commerce Commission's findings and are ready to act on its recommendations.

The commission's study of the retail-fuel market found that over the past decade companies have made higher profits than would be expected if the market had been "workably" competitive.

"For consumers, this means they are paying higher pump prices," said Anna Rawlings, the commission's chief.

The regulator found that loyalty schemes are being used to avoid direct competition and an increasing difference between profit margins on regular and premium fuels that aren't explained by cost differences.

Taxes make up about 45% of the cost of gasoline at the pump in New Zealand. Importers' profit margins on retail fuels are about 18% for diesel and between 12%-15% for different grades of gasoline.

Among the several proposed changes is that New Zealand adopt a system used in Australia whereby fuel importers are required to offer a spot price at which to sell fuel to wholesale customers.

New Zealand's lack of a wholesale fuel market is the underlying reason for high retail gasoline prices, the regulator said.

The major fuel companies in New Zealand--Z Energy Ltd. (ZEL.NZ), BP PLC (BP.LN) and Exxon Mobil Corp. (XOM)--share infrastructure that includes the country's only oil refinery and supply 90% of the country's fuel through their retail gas stations.

The proposed changes will increase competition by allowing a spot wholesale market to develop and by lowering barriers to entering the industry, the commission said.

 

Write to Stephen Wright at stephen.wright@wsj.com

 

(END) Dow Jones Newswires

December 04, 2019 23:38 ET (04:38 GMT)

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