21/05/2012 - General News
Z Energy today said steadily easing global fuel prices, and a stabilising Kiwi dollar, had enabled the company to lead national price decreases across both grades of petrol and diesel of four cents and three cents per litre respectively.
This decrease takes Z’s national prices to 215.9 cents per litre for 91 octane petrol, 223.9 cents per litre for 95 octane petrol, and 153.9 cents per litre for diesel.
Z’s General Manager of Retail, Mark Forsyth, said he was aware of recent scrutiny and comment around fuel pricing and Z was pleased to be able to lead the decrease.
“We want to be straight up that we have started to see a long-overdue improvement in retail fuel margins over the last few weeks after months of pretty poor margins. We are in a highly fixed cost, low margin industry which has historically compensated for very low returns by steadily reducing investment in New Zealand’s basic infrastructure,” said Mark.
“The reluctance from the global oil companies to invest in New Zealand can no longer continue without compromising New Zealand’s security of fuel supply. The recent improvement in fuel margins of around four cents per litre – out of which operating costs are taken – starts to provide the confidence that Z needs to commit $50 million of capital investment in bulk storage infrastructure that New Zealand needs.
“We’re now advancing these plans.”
Z’s net profit margin on fuel sales for the last financial year was 2.1 cents per litre. Its return on capital was less than 10 per cent.
Mark Forsyth acknowledged the pressure from the likes of the AA for prices to have dropped earlier because fuel margins were higher than they had historically been.
“We have been consistent with the AA and with the public – our customers - that history has not served the New Zealand motorist at all well in this industry, and it’s time to change that.
“More than half of New Zealand’s service stations have been closed in the last 25 years, bulk fuel storage has not kept up with fuel demand, fuel tankers are travelling millions of kilometres more on our roads each year as a result, and some of our competitors are avoiding costs by not adding cleaning additives to their petrol,” he said.
“We can continue down this road until our supply chain breaks or we can be straight up with our customers and tell them what’s happening in this industry and why it matters.
“As a Kiwi company, we’re committed to delivering value to our customers and to New Zealand. We will always compete hard on price but we are not afraid to tackle the hard issues in our industry when others would rather not.”