Weekly fuel price monitoring

The Ministry of Business, Innovation and Employment carries out weekly monitoring of “importer margins” for regular petrol and automotive diesel. This data is updated weekly, using data from the previous week.


What are importer margins?

The importer margin is the gross margin available to the retailers to cover domestic transportation, distribution and retailing costs within New Zealand, as well as profit margins. It is calculated as the difference between the discounted price less duties, taxes, levies, the New Zealand Emissions Trading Scheme (ETS) and the importer cost. The calculation of importer margins was adjusted in September 2015 to include discounting activity. This adjustment has been carried back to October 2006.

The importer cost is the cost of importing the fuel to New Zealand. It includes the cost of purchasing the fuel in Singapore, shipping it to New Zealand, insurance and losses, and wharfage and handling.

Why does the Ministry monitor importer margins?

Margins are an indication of the competitiveness of New Zealand’s retail fuel market. This monitoring is a key recommendation from the New Zealand Petrol Review [PDF 706KB] to promote transparency in retail petrol and diesel pricing.

What is the discounted price?

The discounted price is calculated as the main port price less an estimated discount.

The main port price is a weekly average of retail prices in Auckland, Hamilton, Wellington, and Christchurch. From October 2006 onwards, main port prices have been adjusted for the increased prevalence of discounting activity (through loyalty schemes, shopper coupons and regional discounting) to produce the discounted price.

The cost of discounting activity is borne by a range of parties. All other things being equal, this will tend to underestimate the importer margin attributable to oil companies.

As part of their Consumers Price Index (CPI) calculations, Statistics New Zealand surveys a selection of service stations in 12 regions of New Zealand, as well as collecting information about discounting from the major fuel retailers, to produce quarterly average prices. For more information on Statistics New Zealand’s calculation method, see their website.

The estimated discount is calculated as the difference between the quarterly average main port price and the quarterly average retail price series produced by Statistics New Zealand.

MBIE forecasts for each quarter the quantum of the discount and then adjusts this forecast each quarter when Statistics New Zealand releases its latest data.

View the differences between MBIE’s forecasts and the actual discounts [XLSX 13KB]

How does the Ministry forecast the estimated discount?

The CPI data for a given quarter is released a couple of weeks after that quarter has ended. This means that for the current quarter we must use a forecast. This forecast is revised with the actual estimated discount when the CPI data for the current quarter is released.

Data in the weekly table and the graphs is flagged as “Provisional” if it uses forecasted discounts in the calculations. Otherwise it is flagged as “Final”.

The graph below shows the estimated discounts since 2010 along with the current forecasts.

[image] Quarterly discounts

An Auto Regressive Integrated Moving Average (ARIMA) model is used for forecasting.

Data

 

Graphs

 


Importer Margins up to the week ending 17 February 2017 (updated weekly)

Regular petrol

[image] petrol.

Diesel

[image] diesel.


Individual Price Components up to the week ending 17 February 2017 (updated weekly)

Regular petrol

[image] IPC petrol.

Diesel

[image] IPC diesel.


Long-term trends in real Importer Margins (updated quarterly)

[image] Regular petrol and diesel importer's margin.


International comparison of retail petrol prices for OECD countries (updated quarterly)

[image] Quarterly comparison of premium unleaded petrol prices and taxes in OECD countries.

Daily Importer Margin charts

Charts of the daily variability of the importer margin on regular petrol and diesel are included at the above link. These data are provided to the Ministry by Hale and Twomey Ltd. Please note that the data in the above charts are calculated using undiscounted retail prices, and will therefore generally be at a higher level than the Ministry’s weekly importer margins. Care should be taken when comparing these series’.

Data sources

The data is sourced from:

 

All data are presented as non-weighted weekly averages and adjusted to NZ dollars as appropriate based on the prevailing exchange rate.

The costs associated with the ETS are provided by Hale & Twomey based on the prevailing carbon price from the New Zealand Carbon Market.

More information on importer margins and costs is published in the annual Energy in New Zealand publication. A detailed time-series of fuel duties, taxes and levies are available from the Energy Prices data table.

 

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This work is licensed under a Creative Commons Attribution 3.0 New Zealand License.