We carry out weekly monitoring of importer margins for regular petrol, premium petrol and automotive diesel. This data is updated weekly, using the previous week’s data.
About importer margins
The importer margin is the gross margin available to fuel retailers to cover domestic transportation, distribution and retailing costs in New Zealand, as well as profit margins.
It’s calculated as the difference between the:
- discounted price less duties, taxes, levies, the New Zealand Emissions Trading Scheme (ETS), and
- importer cost (cost of importing the fuel to New Zealand —including the cost of purchasing the fuel in Singapore, shipping it to New Zealand, insurance and losses, and wharfage and handling).
The calculation of importer margins was adjusted in September 2015 to include discounting activity. This adjustment has been carried back to October 2006.
Why we monitor importer margins
Margins are an indication of the competitiveness of New Zealand’s retail fuel market. This monitoring is a key recommendation from the 2008 New Zealand Petrol Review (see link below) to promote transparency in retail petrol and diesel pricing.
What changes we have made to the methodology used for monitoring importer margins
- We adjusted the calculation of importer margins in September 2015 to include discounting activity. This adjustment has been carried back to October 2006.
- In December 2018, we made adjustments to account for the introduction of the Auckland regional fuel tax on 1 July 2018.
Regional fuel tax impact on importer margins
Before to the introduction of the Auckland regional fuel tax on 1 July 2018, our method for monitoring weekly fuel prices and importer margins assumed that retail prices were the same across the country.
In December 2018 we applied 2 adjustments to the data to ensure the Auckland regional fuel tax is reflected in the data:
- the retail price series was adjusted, to account for price differences between Auckland and the rest of the country
- a weighted-average regional fuel tax has been added to the duties, taxes and direct levies data to account for the 10 cents per litre tax applicable only in the Auckland region.
We are working with other agencies and data providers to further develop this methodology to ensure that it is fit for purpose.
What is the discounted price?
The discounted price is calculated as the main port price less an estimated discount.
The main port price is a weekly average of retail prices in Auckland, Hamilton, Wellington, and Christchurch.
A minor adjustment was made to the main port price from 1 July 2018 to ensure that prices changes adequately reflected retail price change in Auckland following the introduction of the Auckland regional fuel tax. From October 2006 onwards, main port prices have been adjusted for the increased prevalence of discounting activity (through loyalty schemes, shopper coupons and regional discounting) to produce the discounted price.
The cost of discounting activity is borne by a range of parties. All other things being equal, this will tend to underestimate the importer margin attributable to oil companies.
As part of their Consumers Price Index (CPI) calculations, Statistics New Zealand surveys a selection of service stations in 12 regions of New Zealand, as well as collecting information about discounting from the major fuel retailers, to produce quarterly average prices. For more information on the calculation method, see the Stats NZ website.
Vehicle fuels and lubricants in the CPI(external link) — Stats New Zealand
Estimated discount
The estimated discount is calculated as the difference between the:
- quarterly average main port price, and
- quarterly average retail price series produced by Statistics New Zealand.
Each quarter:
- we forecast the discount for the quarter, then
- adjusts this forecast when Statistics New Zealand releases its latest data.
How we forecast the estimated discount
The CPI data for a given quarter is released a couple of weeks after that quarter has ended. This means that for the current quarter we must use a forecast. This forecast is revised with the actual estimated discount when the CPI data for the current quarter is released. We use an Auto Regressive Integrated Moving Average (ARIMA) model for forecasting.
Data in the weekly table and the graphs is flagged as “Provisional” if it uses forecasted discounts in the calculations. Otherwise it is flagged as “Final”.
