Yes, I'm inclined to that view too, peat, although the big oil co's don't own the refinery outright, of course. How many players do you need in an industry to ensure competition? The answer of course is - it's political.
We had 5 major players including Gull and Caltex until the Commerce Commission in its "infinite wisdom" decided a few years ago that it was okay for Caltex and ZEL to merge.
Surely this is a major egg on face moment and its now completely obvious that competition has been undermine by that merger.
Over time I have witnessed the premium grades of fuel basically doubling the price premium they used to trade at compared to 91 Octane.
e.g. ZEL used to sell 95 octane for 5-6 cents per liter more than 91 Octane about 6-8 years ago. 95 Octane is now 14 cents dearer than 91 at most of their stations.
98 Octane used to be 16-18 cents per liter dearer at BP than 91 Octane and is now well north of 30 cents per liter more expensive than 91.
A good thing is this price board for all grades as I think the dramatic widening of margins for premium grades of petrol is unjustified and I know from some recent article that the AA is of the same view.
Last edited by Beagle; 05-12-2019 at 01:22 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
We had 5 major players including Gull and Caltex until the Commerce Commission in its "infinite wisdom" decided a few years ago that it was okay for Caltex and ZEL to merge.
Surely this is a major egg on face moment and its now completely obvious that competition has been undermine by that merger.
Over time I have witnessed the premium grades of fuel basically doubling the price premium they used to trade at compared to 91 Octane.
e.g. ZEL used to sell 95 octane for 5-6 cents per liter more than 91 Octane about 6-8 years ago. 95 Octane is now 14 cents dearer than 91 at most of their stations.
98 Octane used to be 16-18 cents per liter dearer at BP than 91 Octane and is now well north of 30 cents per liter more expensive than 91.
A good thing is this price board for all grades as I think the dramatic widening of margins for premium grades of petrol is unjustified and I know from some recent article that the AA is of the same view.
AA rather hypocritical .......are they going to end the AA Smartfuel program which is one of the causies of motorists being ‘fleeced’
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Incentive schemes a dime a dozen mate...seems almost everyone has one so I'm not sure you can legitimately call them out for being hypocritical for that. https://www.stuff.co.nz/business/117...how-to-improve "In some cases, premium was selling 40c to 50c a litre higher than 91 Octane, which Stockdale said was "outrageous".
This rort has been going on for far too long !
What's very clear going forward is ZEL's margins will come under increasing pressure and if they thought their margins were under unprecedented pressure this last six months, they ain't seen nothing yet ! Its very clear in my opinion the current forecast dividend rate is not sustainable in the medium term.
The rational move would be for ZEL to streamline their organisation but reading through one or two of their recent presentations management think they're still a "growth company" Say what ???
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
"and discounting has been associated with higher margins overall" Emphasis added. Doesn't actually say its causative though does it.
I think margin creep is unrelated and would have happened regardless. You see this with the margin expansion on premium grades of fuel that I've talked about today. Totally unrelated to discounting, the margin expansion on premium has been dramatic because its less transparent and they've done it simply because they can get away with it.
Bit surprised the shares haven't come in for more selling pressure today.
Last edited by Beagle; 05-12-2019 at 03:26 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
"and discounting has been associated with higher margins overall" Emphasis added. Doesn't actually say its causative though does it.
I think margin creep is unrelated and would have happened regardless. You see this with the margin expansion on premium grades of fuel that I've talked about today. Totally unrelated to discounting, the margin expansion on premium has been dramatic because its less transparent and they've done it simply because they can get away with it.
Yes agree beagle, not that I use premium grade but all the reporting by the "media/commentators" is on 91 and to a lesser extent diesel, leaving them to edge up the higher grades more or reduce them less than 91
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by macduffy
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