Motor trade fears ‘war’ over petrol stations

Press, 7 February 1986, Page 3

Motor trade fears ‘war’ over petrol stations

PA Wellington Forced rationalisation of the oil distribution industry would lead to the closing of a third of New Zealand’s petrol stations within three years, fuel retailers said yesterday.

The executive director of the Motor Trade Association, Mr Max Barclay, said this had been emphasised to Ministry of Energy officials who are planning industry reform. A report on deregulation of the petrol industry was put before the Cabinet this week. The issue will be discussed further with fuel retailers, who are represented by the Motor Trade Association, and the oil companies. Mr Barclay said that while the association supported a limited rationalisation, it opposed wholesale dismantling of the present system of licensing and controls.

“If controls are removed, it will leave the

oil companies in a position to dominate the market.

“Removal of controls inevitably will lead to a petrol price war as the companies fight for a share of the market. This will force smaller retailers, whose margins are already very lean, out of business.” The association had estimated that in the event of a price war, 1000 or about a third of New Zealand’s petrol stations would have to close.

"Any station not owned by the wholesalers, or without substantial wholesaler backing, would be unable to compete. They would disappear. This has happened in other countries such as Britain and Australia.”

Eventually oil companies would be able to manipulate the market and set prices, which would not be in the best public interest, Mr Barclay said.

“There is certainly a case for some modification of the industry. We are over-pumped, and we have been losing petrol stations at a rate of about 80 a year, which is perhaps not as many as we need (to lose). “But we would prefer to see a gradual rationalisation, not a forced one,” he said.

The oil companies are not commenting about any preparations for possible deregulation, but many are believed to be trying to buy options on strategic petrol stations in the main centres. These would become vital to maintaining their market share under stiffer competition.

A Ministry of Energy spokesman said it was too early to tell what specific action the Government would take on deregulating the petrol industry. An announcement was expected by the end of the month.