FAQs

The pump price of petrol comprises: government excise and taxes (37%), product cost (57%) and gross margin (6%).

Product cost  (Ex-refinery price):

Cost of buying the finished fuel product (gasoline or diesel) from the refinery, including freight. Product, shipping, wharfage and insurance.

Government excise and tax:

Grown Consolidate Fund, National Roads Fund, Accident Compensation Levy, Petroleum Funds Monitoring Levy, Local Authorities Petroleum Tax and GST.

Gross distribution margin: 

Based on the average price of a litre of Shell Ultra 91 over April, May, June 2008 - $195.2, the price you paid at the pump is broken down in the following way:

• 37% Taxes and Duties (Crown Consolidated Fund, National Roads Fund, Accident Compensation Levy, Petroleum Funds Monitoring Levy, Local Authorities Petroleum Tax, GST)
• 57% Product cost (Product, Shipping, Wharfage, Insurance)
• 6% Other Costs and Margins (Coastal Shipping, Terminalling, Road Transport, Overheads, Administration, Marketing Costs, Retailer Margin, Wholesaler Margin)

Collusion on price is illegal. Shell does not talk or collude about price with any of our competitors. We set the pump price independently based on the price of oil and our costs of production.

Given that a large portion of the fuel price is determined by the price of oil and the impost of taxes, all oil companies face similar costs.

At Shell, we are committed to bringing the best possible fuel prices to New Zealand motorists.

The recent Government review into fuel pricing states: “…recent price increases are due to increase in crude oil (85%) and increases in taxes (15%). While there is week to week variation in refining costs and importer margins they have had no significant impact on the long term trend…”

The price of oil, the main determinant in the fluctuations of petrol prices we’ve seen recently is affected by various factors. These include, but are not limited to:

• Increasing demand for crude oil and refined product, particularly from developing economies such as China and India
• Limits in global oil refining capacity
• Geopolitical influences - political instability in oil producing countries can cause uncertainties around availability and has a significant impact on crude oil price volatility
• Currency fluctuations – at present, the weak US dollar
• Unpredictable / extreme weather events
• Seasonality Effects
• Import parity prices for refined products
• Competition - fuel prices fluctuate depending on the degree of competition within the local market.

The demand for crude oil and refined products is increasing, particularly in China and India. With the increased demand for oil and refined products, increased supply is needed to match demand.

Fuel prices are affected by a number of factors including the cost of crude oil and refined product, competition in the market, operating costs and taxes.

The price of fuel can vary significantly over time, and as we’ve seen recently, within a relatively short amount of time as the barrel price of oil continues to fluctuate.

Crude oil is refined to produce products, such as petrol or diesel. Refined products are sold on the international market in the same way that crude oil is sold. The market factors that affect the price of crude oil also impact the price of refined products.

As Shell only produces 2.5% of the world’s crude oil supply, we therefore need to buy crude oil and refine products on the international market. For New Zealand, we import crude oil and it is refined at Marsden Point Oil Refinery into petrol, diesel and other petroleum-based products like Jet fuel. Sometimes, we also import refined products directly into New Zealand as the Marsden Point Oil Refinery is unable to supply all of the volume that we need. Crude oil and refined products are traded in US dollars on a global market and the price fluctuates according to the market.

OPEC (Organisation of Petroleum Exporting Countries) controls much of the world’s production of crude oil. Political instability in the oil producing countries has a direct impact on product supply and pricing into the international market. For the last two years OPEC has reduced the production of oil to boost slumped prices. It is a case of supply and demand. If supply is limited and demand is high the price is pushed higher. If the refineries have to pay more for crude oil the cost of the refined product will also increase.

An overview of some of the key findings of the recent Government review into fuel prices:

• “There is nothing in this review that would indicate a detailed inquiry into the New Zealand petrol market would come to any different conclusion to the ACCC inquiry; the petrol market in New Zealand is fundamentally competitive…”

• “Analysis shows that recent price increases are due to increase in crude oil (85%) and increases in taxes (15%). While there is week to week variation in refining costs and importer margins they have had no significant impact on the long term trend…”

• “Retail margins appear to be small with gross margins around 4.2 cents per litre…”

• “Contrary to consumer perceptions, retail prices go down as quickly as they go up.”

• “There is no evidence of collusive behaviour amongst the oil companies…”

• “Like Australia, New Zealand has one of the cheaper petrol prices in the OECD…”

The recent Government review of petrol prices states: “Like Australia, New Zealand has one of the cheaper petrol prices in the OECD (fifth cheapest) a little higher than Australia’s (primarily due to higher taxes).”

Shell does recognise that our customers are concerned and affected by the price of fuel. We strive to provide our customers with a consistent supply of competitively priced fuel. Fuel prices are determined by supply and demand and are influenced by a number of factors.

Obviously an important factor influencing rising fuel prices is the price of crude oil. The world demand for oil remains very strong, coming from mature economies like the US and Europe, plus the developing economies of countries like China and India. Tight supplies have also been aggravated by political instability in some key producing countries. In terms of pricing at the pumps in NZ on average, around a third of the pump price is made up of taxes and duties, while in the UK, these charges add an average 67 per cent to the pump price.

Shell is committed to bringing the best possible fuel prices to New Zealand motorists.

So what are you doing with all the money you make?

In terms of what we do with our profits…As a market leader we must invest in the future of energy and this is increasingly costly. Globally, we are in the middle of the largest investment programme in Shell’s history, and the largest in our industry, investing over 26-27 billion US dollars and building over 50 large projects.

To put it simply, we need to invest in order to produce more energy in the future. The world will need vast amounts of extra energy in the coming decades to support economic growth and reduce poverty. By 2050, energy demand could more than double as the world’s population rises and developing countries expand their economies.