ZEL - Z Energy.

[Mya]

Biggest fleecer would be NZ Government I would think .......... reducing fuel prices would entail selling more volume imo?

I see this opinion on the News by people constantly and I don't get it.

Fuel tax is used to fund roading projects. Those that use the roads more pay proportionally more for the roads than those that don't.

The alternative is to get rid of a fuel tax altogether and increasing income taxes so everyone loses, even those without cars.

At the end of the day unless you drive excessively (or not at all) the fuel tax is fairly irrelevant because the govt will get this tax out of you one way or another.

[Antipodean]

The fuel tax is mostly used for projects through the National Land Transport Fund (~90%). GST is added on top (including GST on the fuel tax itself), and some ACC/local govt slices.

However the National Land Transport Fund can and does invest in non-roading projects such as Public transport,transitional rail& rapid transit, Walking & cyclingimprovements, and what they call Miscellaneous (from their own 2019 report). So those that use roads more, pay into non-roading projects more also. There are more alternatives to fuel taxes than simply income taxes (RUC's being a local example).

The issue is not so much in that road taxes are collected this way, but it means you cannot directly compare say Australian and NZ fuel prices as they fund infrastructure differently. NZ uses fuel taxes heavily. Therefore it is relevant to include discussions of NZ govt fuel taxes in discussions of prices, however you to like to lean on the issue.

According to the AA - "Currently, just under a third of the pump price is the actual cost of refined petrol while about 50% is tax i.e. 63.784 cents per litre in fixed excise" (not including GST, regional excise, emissions trading schemes levy). As the overall price of fuel decreases, this fixed regulatory component of the fuel cost increases in proportion.

[peat]

Commercial fuel sales such as jet and marine have actually gone down this week ending 17th May cf compared to previous so I'm thinking that there may have been a bit of catch up in the earlier figures , so this weeks numbers give more indication of future demand.
Other than Trucks (which haven't gone down much at all) the other main categories , petrol and diesel retail are sitting about 2/3rds of average prior to Covid19 now.

[Bjauck]

I see this opinion on the News by people constantly and I don't get it.

Fuel tax is used to fund roading projects. Those that use the roads more pay proportionally more for the roads than those that don't.

The alternative is to get rid of a fuel tax altogether and increasing income taxes so everyone loses, even those without cars.

At the end of the day unless you drive excessively (or not at all) the fuel tax is fairly irrelevant because the govt will get this tax out of you one way or another.

Fuel taxes are a regressive tax insofar as it forms a much greater proportion of the income of the poorer. And yet if you transfer the burden to income taxes, those who are income poor but asset and capital gains rich, get a free ride, literally!

We all end up paying for fuel taxes, even those without cars, to a degree as it affects all manner of costs.

[Cyclical]

Fuel taxes are a regressive tax insofar as it forms a much greater proportion of the income of the poorer.

That's exactly it. And often those in that category are the ones driving thirsty old Aussie tanks and the like as that's all they can afford. Meanwhile the likes of my well-heeled neighbour drives his nice PHEV Audi into town and back without it even starting the ICE...how many roading projects is he funding?

[dreamcatcher]

Ouch!! ..... this pup becoming painful and SP feels like I am paying staffs weekly wages.

[Beagle]

I agree SylvesterCat, BP's food offer is quite substantially better than ZEL and I have never understood why ZEL or Caltex have never had 98 Octane when many higher performance European cars require this fuel. Go figure ? Its like they have their head in the sand in this regard. ZEL have been the least extreme in their "milking" of motorists with the premium they've asked for 95 Octane but with price display coming its clear that further pressure is coming on their 95 Octane fuel margin. Just annualising apparent forecast 4th quarter margin's gives an interesting heads-up into possible earnings downside for FY21. Start factoring in reduced margins from premium fuel, ever increasing competition for the unmanned minnow station players, Govt action of wholesale pricing and requirements for increased jet fuel storage at Wiri and the steady roll-out of EV's, I agree 100%, the downside risk looks quite significant.

More concerning as you suggest is their cost structure and I really don't think one can rely on management to be proactive in cutting their cloth to suit the new reality that appears to be rapidly unfolding. Management have a history of "shocking" the market with downgrades both to earnings and dividends so anyone relying on 40 cps fully imputed annual dividends is taking a big risk as to its sustainability.

I can easily foresee that 3.5 cpl margin coming down to ~ 2 cpl in FY21.

This post from 27 January 2020 is still how I see this one. Back then I questioned the sustainability of their dividend and sure enough it got cancelled.
This really is a horrible industry and best avoided. I see they have no guidance for FY21...I am not surprised as they probably have no idea what they'll make, if anything. No dividend until at earliest October 2021. I cannot see the investment case and am quite frankly very surprised they managed to tap the market so successfully for such a large capital raise. If ZEL can recapitalise their leaking old boat that's operating in a sunset industry, there's hope for almost everyone else !

[Cyclical]

Ouch!! ..... this pup becoming painful and SP feels like I am paying staffs weekly wages.

That's pretty much what you are doing init. It's not like the funds are being directed towards company growth, it's just a let's keep our heads above water fund.

[Cyclical]

This post from 27 January 2020 is still how I see this one. Back then I questioned the sustainability of their dividend and sure enough it got cancelled.
This really is a horrible industry and best avoided. I see they have no guidance for FY21...I am not surprised as they probably have no idea what they'll make, if anything. No dividend until at earliest October 2021. I cannot see the investment case and am quite frankly very surprised they managed to tap the market so successfully for such a large capital raise. If ZEL can recapitalise their leaking old boat that's operating in a sunset industry, there's hope for almost everyone else !

Agreed, although I think the sunset is still at least a couple of decades or so away...I'm not convinced a fully electrified fleet is viable, but then maybe given time, technology will have the answers. Ordinarily they'd probably do quite nicely with the low oil price/volatility, but not with the supply/demand ratio so out of whack atm. Plus the refinery is likely a big handbrake too in the present circumstances. It's especially hard for this industry with the COL. Although it's interesting that the ACC continues to increase their stake.

[Beagle]

Yeap, its a long sunset, but a sunset industry nonetheless and all the time ICE vehicles will need to meet much tougher mandated Euro emissions requirements which will see a proliferation of hybrid propulsion systems in the years ahead. Heck even Mercedes-Benz AMG (add more grunt) division are going hybrid. (That's sad). I doubt jetfuel demand will return to its former level for many years either. The trend now is towards contactless service so unmanned stations with contactless payment might have an advantage going forward, just bring your own gloves for handling the fuel bowser ! I see the market share of the minnows continuing to expand and ZEL market share continuing to be eroded going forward.