Fuel companies are preparing marketing campaigns to sheet home the blame for next month's rise in fuel prices – and, controversially, to show motorists how to avoid paying
Fuel excise tax and road user charges were cut at the start of the Ukraine war, and reinstating them at the end of this month will be a significant hit to household and business budgets, the fuel industry warns.
To the dismay of environmentalists, Z Energy is set to promote the Sharetank function in its mobile app, allowing motorists to pre-purchase and stock up to 1,200 litres of petrol this month at the reduced excise.
It's being attacked as a "tax dodge for wealthy New Zealanders". Customers need not actually pump the petrol for months – in effect drawing out the excise cuts through to spring and even summer.
"This scheme prolongs the Government’s subsidy for fossil fuel use, something that defies all logic in the middle of a climate crisis," says Green Party transport spokeswoman Julie Anne Genter. "Rather than incentivising activities that add to our emissions, we need to be prioritising investment into initiatives that will aid us in our transition towards a cleaner and greener society."
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But Z Energy argues that for every dollar of fuel bought at Z, just a single cent of that is profit. Communications manager Kiri Shannon emphasises the temporary reduction in fuel excise duty was a Government decision, as is its re-introduction.
Including GST, she says, the re-introduction of the fuel excise duty for petrol will see a 29c-per-litre increase to pump prices. "We recognise its return will have a significant impact on household budgets and business bottom lines."
BP, too, is running a contest through to late July, offering five customers who pre-purchase fuel on the company's BPMe app the chance to win a year's supply. And the Automobile Association expects most fuel retailers will come to the party with promotions in the last couple of weeks of June.
“Motorists in these times, if they see an opportunity to manage their bills accordingly, should actively do it. It's not going to make any difference on the Greens idea of how much fuel is going to be used.” – Terry Collins, AA
Shannon confirms the sale of fuel is made at the time it is purchased via Z Energy's app, and that becomes a balance of litres in the customer's Sharetank account. "Any associated tax cost with the purchase is included at this time, not at the time the fuel is redeemed," she says.
Sharetank allows customers to pre-purchase up to 1,000 litres of fuel (91, 95 or Diesel) in one transaction, and scans every Z service station within 30km of the motorist's location to access the lowest pump price within that area.
Customers aren’t restricted by the size of their fuel tank, only by the 1,200 litre limit on their account, and they can redeem their pre-paid purchase at any Z station in the country.
Shannon reiterates, again, that the tax increase is imposed by the Government, and Z keeps none of the money.
Customers who pre-purchased the maximum 1,200 litres this month would save $348 on fuel excise and GST when they redeemed their purchase over subsequent months – an attractive proposition for motorists and for Z Energy, but not for Government coffers.
AA principal policy advisor Terry Collins acknowledges the criticisms that only the wealthy can afford to stock up on 1,200 litres of petrol, at a cost of nearly $3000. But he says the fuel companies and motorists are entitled to work within the law to manage their budgets.
"Motorists in these times, if they see an opportunity to manage their bills accordingly, should actively do it. It's not going to make any difference on the Greens idea of how much fuel is going to be used."
“It will force everyday New Zealanders, already suffering from the cost of living crisis, to subsidise the super-wealthy who can afford to buy excessive quantities of fuel.” – Christine Rose, Greenpeace
He says it extends to regular motorists the same opportunity that fleet operators and farmers will take, to buy fuel when it's cheap and stockpile it in tanks. But the pre-purchase app instead allows customers to store the fuel in their Sharetank account.
"I will be stocking up with some extra fuel," Collins says. "I'm going to look at all the schemes in the last week of June and see which is the best offering. And I'll make a decision on what to do."
As well as his cars, Collins is hoping to be back on his bike this summer, after a knee operation. "I would top up for my motorbike for my summer riding. I would top up for all my vehicles."
However, Adam Currie, a campaigner at climate lobby group 350 Aotearoa, disagrees. "This embarrassing attempt to dodge tax and climate commitments is exactly what we'd expect from Z Energy, New Zealand's second-biggest emitter," he says.
"This initiative from Z Energy is effectively a tax dodge for wealthy New Zealanders who can afford to purchase up to 1000 litres of petrol in advance, yet makes little difference for those who are struggling to make ends meet.
"It will drive climate-killing fossil fuel consumption – incentivising consumers to burn more fuel in a time of climate collapse. Frankly, Z should be embarrassed to be running these kinds of tax-dodge-enabling initiatives – and the Government must intervene."
Christine Rose from Greenpeace says Z Energy is knowingly encouraging virtual stockpiling of fossil fuels, to maximise its corporate profits, and Oxfam's Nick Henry says it highlights the urgent need for to lower emissions and lessen the cost of living burden, by extending access to affordable public transport.
Figures crunched by Gaspy, the consumer-reported fuel price app, confirm regular 91 petrol prices now are lower than they were in early February 2022. The average national prices on Feb 10 last year were 266.07c for a litre of regular 91, and 188.85c for a litre of diesel. Yesterday's prices, by contrast, were 240.04c for 91 and 190.47c for diesel.
“None of us are who aren't buying in advance are paying any extra tax as a result. The Government will miss out on a small (negligible most likely) amount of tax revenue.” – Paul Smith, Consumer NZ
Diesel doesn't have the excise tax reduction; instead diesel car and truck drivers pay a reduced road user charge. So they too are paying far less than they were.
Gaspy director Mike Newton says he doesn't envy politicians having to make those kind of decisions about reinstating the full fuel excise tax. "It's a difficult balancing act between the cost of living and the need to keep investing in infrastructure and maintenance," he says.
"Nobody wants their cost of living going up at the moment but at the same time we also want the potholes fixed! You can see though from our graph that fuel prices are as low as they have been in some time so in that respect if the excise must go back on, there's no better time than now to do it."
There is a catch for motorists – not just the potential impact on climate pollution if motorists are encouraged to keep driving their petrol cars more and for longer.
A Consumer NZ review points out that Sharetank gives motorists the lowest ticket price in a 30km radius – it doesn't allow them to claim discounted pricing. And if a customer pre-purchases fuel then the price subsequently drops, they're stuck with it.
"For Z Energy, Sharetank locks you in to buying its fuel, and adds a layer of obfuscation to what you’re paying and saving," writes Consumer NZ test manager Paul Smith in the review. "It’s not a guarantee of cheap fuel – Z Energy has loaded the system in its favour. However, Sharetank is convenient and could save you money."
This week, he adds that pre-purchasing petrol on Sharetank this month isn't much different to buying anything in bulk before the price goes up. "Some can afford to do that while others can't."
Smith says the whole point of the Sharetank scheme is to allow people to gamble and pre-purchase fuel when they think the price is low, to use later. When that works, it disadvantages everyone else that can't stock up in bulk. Z will lose revenue on the pre-purchased fuel and will gather that from other customers through a higher undiscounted price.
“This isn't an extra tax, it's the removal of a discount that's cost a lot in lost tax revenue and harmed us all by encouraging car use, while doing nothing to target those who are most feeling the cost-of-living squeeze.” – Paul Smith, Consumer NZ
It's the same with any fuel discount scheme – those who don't use it to the fullest extent effectively subsidise those that do. This situation is no different, except it's a sure bet because the price increase has been signalled by the Government.
"No one pre-purchasing will get this fuel at the taxpayers' expense," he says. "None of us who aren't buying in advance are paying any extra tax as a result. The Government will miss out on a small (negligible most likely) amount of tax revenue."
Smith suspects the bigger hit in tax revenue will be from lots of people filling fuel tanks to the brim the day before the tax is re-added, but says that's probably been factored into the Government's projections.
"And let's not forget, the price is going back to what it should be and was," he says. "This isn't an extra tax, it's the removal of a discount that's cost a lot in lost tax revenue and harmed us all by encouraging car use, while doing nothing to target those who are most feeling the cost-of-living squeeze."
