Wednesday, 12 April 2006

Petrol price gouging

There is a feeling afoot that there is some group taking advantage of high petrol prices to make a killing, to rip you off, to take you for a ride. That feeling is correct: the culprit is the Government.

At 166.9c for every litre of 95 octane petrol, the Government takes about 68c of that litre as excise tax. Sixty-eight cents. Every time the price rises ten cents they get just over four cents of that -- and of course that includes the extra 0.79c per litre in tax (plus GST) that kicked in on April 1, but does not yet include extra taxes proposed to build new roads like Wellington's Transmission Gully.

How much of every litre you pay for gets spent on roads? About 24c.

So when you fill up your Toyota Corolla (thanks to the Herald for the graphic), approximately $36.33 of every tank is going to the grey ones. Thirty six dollars and thirty-three cents, of which about $12.80 goes to build and maintain the roads.

So if you want to yell at someone when you fill up today, don't yell at the person at the pump filling you up; ring your MP and vent your spleen at them for being complicit in ripping you off. And if you want prices to fall, you could try lobbying the US Government to remove exploration restrictions and refinery taxes, environmentalists who oppose drilling in empty wilderness, rebels and insurgents in Iraq and Nigeria disrupting suppies, and intransigent mullahs and Mahmouds in Iran. Good luck with that. Just be happy that oil prices are still not at record highs.

LINKS: Petrol soars: get used to it - Herald
Why is oil so gosh-darned expensive? - Not PC (August, 2005)
Taxing profits stifles oil production - Not PC (September, 2005)
Oil at a record high? - Not PC (December, 2005)

TAGS: Economics, Energy, Politics-US, Environment


  1. Or... yell at yourself for having purchased that "lifestyle" property that is over an hour away from where you work.

  2. When I learnt to drive in the late 1980's petrol was about 90c a litre.

    Since then I think we've had about 30c a litre extra in tax (mostly in the past 7 years) and 45c in extra fuel costs per litre.

    Of course we had the period in the 1990s when Kuwait and Saudi Arabia pumped as much oil as possible to keep prices low as gratitude for throwing Iraq out of their territories.

    Considering oil prices have gone from about US$20 a barrel then to US$65 a barrel now I don't think there is any price gouging by oil companies involved.

  3. Most of any gouging that occurs is further up the chain in their own refining processes anyway.
    By the time it reaches the pump / station there is very little to no margin left for the actual operator

  4. Your numbers are wrong - all up excise,acc and local taxes add up to just over 48.4 cents. You may mean all taxes including GST on the tax and product portions-

  5. PC, the amount spent on roads is now about 33c if you take into account Cullen spending about 9c a litre on specific annual funding for roading. He wont dedicate the money for good by legislation, just uses it in the budget as an annual appropriation for Land Transport NZ to spend on roads.

  6. Anonymous, all up government takes just under 41% of the cost of petrol at the till.

    Thanks Scott. When are you due back in here?

  7. Gouging, IIQ? The oil companies themselves take only about 7-8% of the cost. And they've earned it.

  8. PC, in Hawke's Bay at the moment, will be in Auckland briefly in a couple of weeks

  9. Ouch! Just did the math on what it would cost to fill up my truck - $165NZD ($101US). I love my 5.4l, gas guzzling F150 as much as the next girl, but I would be driving something much smaller in New Zealand. And live closer than 45 mins. from the office.

    Might not even matter for me, since I seriously doubt my ability to meet the constant rise of immigration marks. By this time next year, I wouldn't be suprised to see the words "don't bother" on the front page of the skilled migrant section of the govt. website when I do the screening.

  10. You are just so incredibly ignorant about big oil and big business PC. That is why you liked that Prime Movers book.

    The oil coys are CREAMING IT. And they don't deserve it - I can assure you and give you evidence of corruption. But your mind is already made up.


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