The cost of fuel at the pump is made up of four parts

 

1. Product cost

What we pay to buy refined fuels (i.e petrol and diesel) from international refineries on the on the international market and the cost to ship to NZ.

 

2. Government tax

Government taxes (GST and fuel tax) and levies (ACC, the emissions trading scheme and others) make up about $1.05 for every litre of fuel (the Auckland Regional Fuel Tax is on top of this) – so even if it didn’t cost us anything to buy fuel, ship it to NZ and Z employed no one, you’d still be paying over $1.05 per litre.

 

3. Operating costs

The costs we incur to bring fuel to customers, like maintaining storage tanks, local distribution via trucks and tankers, electricity to power our stores, right down to the credit card fees we pay the banks to take electronic payments, and the costs to train and employ nearly 2,000 Kiwis at Z stations across Aotearoa New Zealand.

 

4. Net profit

Our net profit is what we earn after we’ve paid for the refined fuel, taxes and levies and accounted for our operating costs (of which we have fixed costs of about $400m per year). Our calculations on net profit are stated after corporate tax. In FY21, our replacement cost net profit was 0.1 cents per litre, down from 1.1 cents per litre in the previous year.

 

Good, honest answers

Here are the answers to some of the most common questions we get from Z customers.

If you're wondering about something that's not listed below, give us a ring on 0800 474 355 or contact us. You can also reach us on Facebook and Twitter.

 

How do you decide how much to charge for fuel on any given day?

The cost of fuel at the pump is made up of a number of factors. Pricing on the global market fluctuates daily, as can local competitive pressures, therefore Z continually reviews the range of input costs and market conditions daily and makes any changes (up or down) as and when we need to.

 

Why does the price of fuel change so often?

The biggest contributors to the cost of fuel are the price of refined fuel, Government fuel taxes and levies, as well as the costs we incur to bring fuel to customers.

Z buys refined petrol and diesel on the international market. If the price of refined fuels increase, or the NZD weakens against the USD, the prices will likely go up at the pump. If the opposite happens, then prices at the pump will come down.

Government fuel taxes and levies account for over 40% of today's 91 unleaded prices, and if you’re in Auckland over 50% as you’ve got the regional fuel tax included, so well over $1 per litre. A big driver of this is the rising carbon price (under the Emissions Trading Scheme), which makes up around 16cpl – twice what it was a year ago.

 

When the price of refined fuel goes down do you pass cost savings on to us at the pump?

Yes, we do. We pass on price decreases as quickly as we can, and we also absorb international price increases for as long as we think we possibly can.

 

Why is there a difference in fuel prices at different Z stations?

Z’s fuel pricing is localised. What this means in practice is that prices can be different at service stations within regions or even the same towns based on a range of factors such as varying property overhead costs or local competition. At Z, the prices are set by head office not by the individual service stations.

 

Why does the pump price sometimes go up on the same day, or the day before or after a special Pumped discount?

If this happens, it's a complete coincidence. Prices change every day of the week.

The discounts for Super Pumped Days are decided separately to the pump price, by a separate team. Super Pumped discount days are decided well in advance so we can advertise them properly. On the other hand, pump price moves are usually based on international factors that are out of our control and are far more reactive, often leading to changes within a single day.

 

Why are prices different between fuel brands?

Each company has a different business model, from low-cost, unmanned sites to full-service stations. There are different operating costs associated with each model.

For example, the cost base of an unmanned, standalone site is a lot lower than a fully-staffed service station that has a canopy and car wash on prime real estate.

These options mean more choice for everyone and appeal to people who want the extra service and convenience, and to those after the cheapest fuel they can find.

 

Why cant you just lower the cost of fuel?

While we can’t always lower the price of fuel, we can show New Zealanders where the best Z price is within the local area, through Sharetank on the Z App. Sharetank shows you the cheapest Z price within a 30km radius and allows you to bulk pre-purchase fuel (up to 1,000 litres of any grade, i.e. 91, 95 or Diesel) at that price.

You can then share that great price with up to five people, or keep it for yourself, and redeem those litres at any Z stations across Aotearoa New Zealand at the price you paid, regardless of what is shown on the pump at the service station you refuel at. We also have a number of discount programmes including Pumped and Z Business which we encourage customers to take advantage of.

An app like Gaspy can show you prices in your area to help you find a price that is good for you.

 

Is competition in New Zealand's fuel market fair?

As part of changes under the Fuel Industry Act 2020, Z and the industry now display all prices for all grades on our retail prime signs enabling greater consumer choice. The industry has also developed more competition in the wholesale market with the creation of Terminal Gate Pricing that enables greater competition for wholesale distributor volumes.