Nat’s fuel price inquiry an exercise in arrogant hypocrisy

screenshot089Apparently NZers are concerned about the profit margins made selling petrol diesel and oil. People feel they are somewhere in the chain getting ripped off. Quick! Bring out the big stick and whack the oil companies and the retailers.

Energy and Resources Minister Jude Collins has announced a “Fuel Price Inquiry” Fuel companies are being asked for information the govt already has anyway. However one thing the inquiry does not reference is govt taxes charges and other costs. This is a serious omission.

Because if you’re looking for the real culprit in any perceived extortionist rates for fuel, nobody does it like Wellington MPs and bureaucrats. They rake a huge profit from oil without bearing one iota of the tremendous risk.

When you buy a litre of fuel, the major cost component is govt charges. Tax, fuel excise, tax on tax and royalties are all accounted for in the $2.00 or whatever you pay per litre. Here’s a rough estimate of what you pay to the govt in dollar terms at the pump. (estimated on fuel price of $2.09 per litre)

  • 59.524 cents – National Land Transport Fund
  • 6.90 cents – ACC Motor Vehicle Account
  • 0.66 cents – Local Authorities Fuel Tax
  • 0.2 cents – Petroleum or Engine Fuels Monitoring Levy

Then you pay another 15% GST . A tax on taxes. A double tax.

But wait there’s more. Much more. See the AA graph showing the breakdown of charges? Note the cost of refined fuel, and shipping. What is not shown is the govt cost component in these charges, and that is where they really rake it in. Regulations and other taxes and charges would make up at least 50% of the totals shown. So if you do that calculation again, it adds around another 15% govt cost component to the 46% already showing.

But don’t forget the importer pays costs to the govt, not least by way of company tax close to 30% of profits. As do the retailers and any other company involved in the supply chain.

Taking all of the govt charges from the time an oil company decides to explore for oil, until the time it delivers fuel by the pump to the customer, the payment to the govt is probably around 75% of that $2.00. And that is an estimate that is exceedingly generous to govt.

So if you’re going to have an inquiry into the price of fuel, there should be a section covering govt costs. There is not of course. So let’s go forward with an inquiry that ignores 75% of the cost structure.

The worst part is the NZ public at large don’t care about this glaring omission. Ageing bald on top pony tailed socialists and dumb as a box of rocks socialist millennials lack the perspicacity to approach the problem any other way than by bashing the people who actually do something (besides sell real estate) in this tragic little socialist basket case of a country.

But wait again. There’s even more still. Fuel prices are not only high because of the cost of govt, they’re also high because of govt regulation that has virtually forced small players out of the game, thereby reducing competition and leaving the field wide open for the big operators.

So you want to point the finger at someone for high fuel prices, the person you’re looking for is your local MP. Without the burden of govt charges, fuel would be about 50 cents  a litre.

The Fuel Price Inquiry is just a pathetic hypocritical and delusional sop to people who do not have a clue about economic and political reality.