Peter de Graaf

Petrol prices have plummeted in Whangārei following the arrival of a cut-price outlet in what used to be New Zealand's most expensive city for tanking up.

Earlier this year, the Commerce Commission launched an investigation into petrol pricing around the country, singling out Whangārei for its sky-high prices despite being just up the road from the Marsden Point fuel import terminal.

Now, however, Whangārei is the cheapest place to fill up in Northland, and its prices are also significantly below the Auckland average - a reversal of the situation just a few months ago.

Tuesday's lowest price for 91-octane in Whangārei is just under $2.58 a litre.

That compares to prices of up to $3.16 when RNZ checked out the city's petrol stations in late September.

Tracey Rissetto, chairperson of the Automobile Association's Northland Council, put the turnaround down to the arrival of fresh competition.

She said Allied Petroleum had recently added self-service petrol pumps to what had been just a truck stop in Kioreroa Road, in an industrial area near the city's transfer station.

"All of a sudden their prices were 10, 15 cents a litre cheaper, which caused a lot of demand, and I think the rest of the market has had to match them."

Rissetto said the price drop backed up her belief that it was competition, or a lack thereof, that had led to Whangārei's previously high petrol prices.

"We've had one new competitor in the town and it's definitely changed the prices. We've seen similar things further north when Waitomo and Allied have opened outlets. They've driven prices down by charging a more user-friendly price than the big players," she said.

Staff at the AA's Whangārei office had been urging customers to install the Gaspy app on their phones so they could take ownership of where they bought their fuel.

Rissetto said it was great timing for Whangārei motorists who had been hit by the high cost of living, or who were planning to head away for the Christmas holidays in boats or caravans.

A drop in international oil prices had also helped bring down the cost of filling up.

Earlier this year, the inexplicably high cost of filling up in Whangārei was one of the factors that prompted the Commerce Commission to launch a nationwide petrol price investigation.

The commission wrote a "please explain" letter to fuel companies in September after finding a wide variation in prices between, and even within, cities with no obvious explanation.

At the time, Whangārei mayor Vince Cocurullo said logic dictated that motorists closest to the import terminal should be charged the lowest petrol prices.

Instead, for reasons he could not fathom, it was the other way around.

Cocurullo said it was unfair given Northland's high rates of deprivation and lack of public transport outside Whangārei's city limits.

A spokesperson for the Commerce Commission said investigators met representatives of all fuel importing companies in September and October, and had since been assessing the price explanations they provided.

"Our view remains that differences in costs alone do not explain the observed differences in retail fuel prices within and between cities," the spokesperson said.

"We continue to work with importers to further clarify our understanding of what is driving these price differences, and are conducting further analysis into local competitive dynamics across the country."

The Commerce Commission expects to publish further findings on the country's petrol price anomalies next year.

Whangārei also experienced a dramatic drop in petrol prices when Gull, then a relatively small New Zealand-owned business, first opened an outlet in the city several years ago.

In 2022, however, Gull was sold to an Australian equity company, which lifted its pump prices into line with the major players.

This story was originally published by RNZ