All these Petrol Companies yet no Competition between them

[Driftit 1964]

As my topic title states. Why is there all these petrol companies yet I dont see any competition in prices between them all. They seem to all be working as one entity. If one raises prices so do the others. They may hold for 1/4 or 1/2 a day then will match.

It seems to me they can charge what ever they like. One giant monopoly that has the public by the balls and does not care. I also noticed that they have put their drink and other confectionary prices up another .50c on average making a simple bottle of water around $3.50. Around $1.20 more than my local Dairy.

But really I would like to know why there is no price competiton at all.

[jjs 60]

As my topic title states. Why is there all these petrol companies yet I dont see any competition in prices between them all. They seem to all be working as one entity. If one raises prices so do the others. They may hold for 1/4 or 1/2 a day then will match.

It seems to me they can charge what ever they like. One giant monopoly that has the public by the balls and does not care. I also noticed that they have put their drink and other confectionary prices up another .50c on average making a simple bottle of water around $3.50. Around $1.20 more than my local Dairy.

But really I would like to know why there is no price competiton at all.

I bit of ECON101... It's whats called an oligopoly.

Demand is pretty much inelastic (doesn't change when prices do) and barriers to entry are high.

The classic oligopoly form of competition is "non-price". In the fuel retail industry, things like service, fuel additives, reward programmes etc are what they use to differentiate themselves.

They do compete, just like any other business. The difference here is that the competition is by other "non-price" means. Just take a look at how much is spent advertising the latest additive (Vortex, VMax), or reward programmes (AA, Flybuys).

[togate 0]

I bit of ECON101... It's whats called an oligopoly.

Demand is pretty much inelastic (doesn't change when prices do) and barriers to entry are high.

The classic oligopoly form of competition is "non-price". In the fuel retail industry, things like service, fuel additives, reward programmes etc are what they use to differentiate themselves.

They do compete, just like any other business. The difference here is that the competition is by other "non-price" means. Just take a look at how much is spent advertising the latest additive (Vortex, VMax), or reward programmes (AA, Flybuys).

well done!

i bought a powerade from caltex the other day for 4.50, wowzers!

[BMW Sila 0]

The petrol price is seriously getting ridiculous. It’s out of control...

I bet by the end of this year, petrol would cost 3$ a littler.

..

[jjs 60]

well done!

i bought a powerade from caltex the other day for 4.50, wowzers!

I guess they got you on the "convenience" factor. Will be interesting to see what happens when the Woolworths are integrated into some stations

[my_e36 43]

Try $6 for sandwiches. That's the almost the same price as Ponsonby cafe.

[Cale 36]

Yes, the oligopoly market is working almost like a monopoly. Being an oligopoly also they make prices and their control is very high over this.

The problem is that petrol is such an inelastic commodity that we as consumers cannot do without ATM, no matter what the price, so the petrol companies can charge however they like- of course staying within range of the other four large petrol companies. This causes a lack of (price) competition in NZ. Contrary to popular belief, no collusion occurs between the companies.

Most of our petrol is supplied by the four main companies BP, Caltex, Shell and Mobil, who, buy the same crude oil on global markets, ship the crude in the same ships that go to the same refineries. This means the companies prices are uncannily similiar.

Gull and Chellenge seem to be the behind the 8 ball with lower prices and if we all (everyone that wants crap petrol) buys from them maybe more competition will arise.

I think in 2000, ~30% petrol price was crude oil, in 2008, ~45% reps crude oil, so the margins are actually getting smaller and in percentages, the oil companies are making less per barrell.

What pisses me off that Marsden Point was paid by taxpayers then given to oil companies.

Hence I ride a motorbike

Edited June 11, 2008 by Quailboy

[Antallica 15]

What's even worse is I can drive 30km to the Marsden Refinery yet you AK'ers 170km away get it cheaper.

Yes, going to get back on the saddle once some debts are called in.

Edited June 11, 2008 by Antallica

[Driftit 1964]

What's even worse is I can drive 30km to the Marsden Refinery yet you AK'ers 170km away get it cheaper.

Yes, going to get back on the saddle once some debts are called in.

You sure about that. Mate of mine just moved to Chch from Auckland and said the prices were the same the whole way there on his drive down.

I have to admit. At first when petrol started to rise I thought oh well thats just what happens. But now that I am starting to feel the effects I thought I would have my cry.

Oh and I can't believe you guys still remember anything from Eco101. I only did it last year and dont remember a thing. Haha.

What is the Governments Tax rate on Petrol? Do they charge tax on the pump price or the price per purchased "barrel"?

Should also add that in no way does any advertising or supermarket discount/flybuys bullshit influence which station I choose. Because I have no choice in price I replace that option with who has the best gas for my car.

Edited June 11, 2008 by driftit

[Jeddy 0]

What is the Governments Tax rate on Petrol? Do they charge tax on the pump price or the price per purchased "barrel"?

according to the news the other day its 55c a liter. There's tax all over the place these days. I think 55 is GST, duty, excise etc

[bravo 34]

Tax is a percentage of the pre-tax retail price, so if the price goes up 5c a litre part of that 5c is extra tax (both duty AND GST).

driftit - Antallica is correct. The pump price in Whangarei is higher than Auckland by a couple fo cents. In the far north expect to pay between 5 and 10c a litre more than Auckland. Main centres (kerikeri, paihia) 91 is currently $2.09 and 95 is $2.14 (we don't get 98 up here at all). In the districts it's $2.11 for 91 and $2.16 for 95. The other day I was working in houhora and noticed that 91 was $2.21!

I've got a company car so it doesn't worry me quite so much, but my g/f has started to car pool with a friend as she drives 350km a week to and from work. Once we have finished renovating my house, we are going to rent it out and move close to her work so that her gas bill shrinks.

Edited June 11, 2008 by bravo

[topcat 11]

Or maybe the oil companies are actually one company,with 4-5 operating brands.

My Dad has one regret in life, not buying shares in Shell when he had the chance back

in holland bout 40 odd years ago.poo's,i could have been driving my big block everyday

Edited June 11, 2008 by topcat

[Driftit 1964]

My family owned Shell on Quay Street back in the 80's. Was the only 24hr station in Auckland. Haha.

[hybrid 1039]

in other news

http://automobiles.honda.com/fcx-clarity/

OPEC is going to be the sh*t in 5 - 10 years time ... they really did push it too far.

[Mark 178]

in other news

http://automobiles.honda.com/fcx-clarity/

OPEC is going to be the sh*t in 5 - 10 years time ... they really did push it too far.

Hydrogen cars are a just a wanky marketing exercise for the car companies. At the moment there is no efficient way to create large amounts of hydrogen without using oil to do it! This will be the case for the forseeable future as well... so while hydrogen cars may be viable one day, at the moment you're better off driving a modern turbodiesel or dare I say it... even a hybrid!

[JovianX 0]

Dinners has a new credit card which gives you 5% off fuel (and anything else) from Gasoline Alley Services (GAS) stations. But beware.... GAS seems to have "discretionary" pricing on premium... but generally it gets you some discount....

And on economics, OPEC claim that there is no supply shortage of fuel and that price is being pushed up by speculators trading on the market, I guess people who think that they can't loose buying oil now and holding onto it (who can blame them). Economics is a self full filling prophecy. Either way we pay.

[my_e36 43]

Hydrogen cars are a just a wanky marketing exercise for the car companies. At the moment there is no efficient way to create large amounts of hydrogen without using oil to do it! This will be the case for the forseeable future as well... so while hydrogen cars may be viable one day, at the moment you're better off driving a modern turbodiesel or dare I say it... even a hybrid!

NZ has potential to do hydrogen I guess, when we have surplus in the hydrolake, then we could use that to do elctrolysis to zap the water to make hydrogen.

Must say, turbo-diesel is good (I drive one). 1.4 litre engine makes equivlent torque in a 2.5 litre petrol. In-gear acceleration is awesome. This went slightly off-topic now...

[Simo 0]

The total taxes in each litre is close to a $1 in the $2.10 91 unleaded price in AK at the moment, why dont petrol stations advertise the price on the boards outside the station, and then say plus tax, so the NZ consumer can really see where the rort is taking place. A thread a few back mentioned that the Marsden Refinery was given to the oil companies way back, well tucked into the taxes and levies is a Marsden Refinery levy that we are still paying for, talk about double dipping the NZ motorists..........

[Jeddy 0]

why dont petrol stations advertise the price on the boards outside the station, and then say plus tax, so the NZ consumer can really see where the rort is taking place.

I think its because legally you must display the price with all taxes included so not to be misleading