The Commerce Commission is watching fuel retailers closely after oil prices fell, saying businesses must pass on lower wholesale costs to pump prices the same way increases were reflected when costs rose.
The Commerce Commission is keeping a close eye on fuel retailers after oil prices fell, warning that businesses must pass on lower wholesale costs to pump prices in the same way increases were reflected when costs rose.
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 move in both directions. "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," he said, as RNZ reported.
The Commission's reminder follows a period of sustained pressure on household budgets from higher fuel prices, driven partly by the conflict in the Middle East. Now that the region has shown signs of greater stability, Chapple said lower imported fuel costs should flow through to consumers. "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."
The Commission has previously investigated "rocket and feather" pricing — where fuel prices rise quickly but fall slowly. Chapple said that pattern had been documented in a study several years ago but had not been evident since, per RNZ's earlier coverage of the Commission's fuel pricing study. He credited market reforms introduced in 2021 and 2022 with making the wholesale fuel market more competitive, enabling smaller operators like Waitomo and NPD to access fuel and expand their offerings.
Fuel surcharges must reflect actual costs
Businesses that added fuel surcharges or fuel adjustment factors (FAFs) when prices rose have also been put on notice. Chapple said any surcharge must reflect the actual change in fuel costs and could not be used to recover unrelated expenses or increase margins. "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."
The Commission cannot set fuel prices or directly control what retailers charge. Its powers under the Fair Trading Act include the ability to investigate and take action against businesses found to have misled consumers or made false representations about pricing.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.