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Strategies to spend less on petrol require effort.

Gaspy founder Larry Green isn't much impressed with the supermarket petrol station fuel discount schemes.

Gaspy's App lets people compare fuel prices in their area, but when Green crunched the numbers for average Auckland petrol prices charged by BP, Z Energy and Gull between July 24 and September 15, he found a clear pattern.

It was a period during which the retail petrol discounts offered by Z Energy and BP were around 6 cents a litre.

But during that time the average Z Energy price was 5.3c to 15.5c above Gull's. BP's was 5.3c to 14.6c higher than Gull's.

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People claiming their fuel discounts at Z Energy and BP using loyalty cards, or supermarket vouchers, may get a discount off the price on the forecourt sign, but "over a large part of the year, it's still not the cheapest fuel." Green says.

SUPPLIED Gaspy co-founder Larry Green warns a discounted price does not necessarily mean the lowest price in your area.

For that, motorists often have to turn to discount retailers like Gull, or "unmanned" petrol stations.

"Scam is not the right word. It's shrewd business," Green says.

THE ILLUSION OF A DISCOUNT

Around 70c in every dollar of petrol sold to ordinary motorists by Z Energy, which has invested in making buying petrol pleasant, is sold under one of its discount scheme link-ups with the likes of Air New Zealand Airpoints, FlyBuys, AA, or the Foodstuffs' New World and Pak n' Save supermarkets.

The discounted price is, arguably, the de facto standard price for its petrol, not the price on the electronic boards fronting the road.

GASPY Average petrol prices calculated by Gaspy show the gaps between petrol retailer Gull and the pump prices of BP and Z Energy.

BP would not reveal the proportion of its fuel sold under the discount scheme "due to commercial sensitivities".

Yet the language used is of discounts, not people paying a penalty price for petrol, if they refuse to carry a discount card, or play the discounts game.

"I think most of it is about language", Green says. "You just assume 6c would make it the cheapest, when it's not."

The Australia Monitor of Fuel Consumer Attitudes found just that effect. Many people used "getting a discount" as their main strategy for feeling like they were paying a good price for fuel.

"Nearly a third of consumers indicated that they use supermarket discount vouchers to reduce the price of fuel, while 17 per cent use a loyalty programme associated with a brand."

By contrast just 11 per cent of respondents used fuel price websites, and another 8 per cent used fuel price apps on their mobile phone.

Australia is not New Zealand, but Gaspy is used by only around 200,000 people, though the number is growing by the week.

SUPPLIED An excise tax rise will add 3.5 cents onto each litre of fuel from October 1.

BENEFITS TO RETAILERS

Charging different people different prices for the same fuel is dubbed "price discrimination" in a report for the Ministry of Business, Innovation and Employment's petrol price review.

It's a deliberate tactic to keep or win price-sensitive customers, while charging more to customers unable, or unwilling to play the discount game.

"Charging the same price to all customers means a firm must lower its price for all customers if it wishes to expand its market share," the report says.

"With price discrimination … it can expand market share by offering a lower price to just a subset of customers, retaining a higher price for customers it already serves."

"This enables the firm to make higher profits than with uniform pricing," it says.

From the point of view of the petrol retailers, segmenting your market, and charging the most you can for each different segment is economically "efficient".

"Price discrimination can have efficiency benefits, for example by recovering fixed costs more from price-insensitive customers than price-sensitive ones," but, it warns: "In imperfectly competitive industries, price discrimination … can increase profits".

WHO PAYS MORE?

There's growing criticism the "prompt payment discounts" of the electricity industry are just hidden late payment fees disproportionately hitting lower-income households.

Could it be the discount schemes are tailored to capture the most lucrative customers with middle and higher incomes, leaving a greater proportion of lower income families paying the pump price for fuel?

Budget adviser Sue Dawson from the North Shore Budgeting Service thinks it's likely.

The more hurdles there are, and small print, between a fuel-buyer and a discount, the more likely people struggling with money won't participate.

"Often there is too much stress in their lives already for it to make it onto Maslow's hierarchy of needs," Dawson said.

Abraham Maslow was a psychologist famous for his hierarchy of needs, which ranked human needs in order of their power to motivate people to act on them.

Discounts schemes linked to volume also disadvantaged those who could only afford to buy petrol in small quantities.

One example was the BP/Countdown tie-up that required people to buy $40 of petrol to get the discount of 6c a litre.

Dawson prefers supermarket docket-based voucher discounts schemes, like the link-up between Z and New World and Pak 'n Save, where the full discount is available after even small shops.

But even that results in different people paying different prices.

"Everyone should pay the same price," she says.

DEFENCE OF DISCOUNTS

Z Energy's chief executive Mike Bennetts, does not believe the comparison with electricity prompt payment discounts is fair.

STUFF Mike Bennetts, chief executive of Z Energy, says some people choose not to exercise their consumer right to join a fuel discount scheme.

The fuel discounts are around 2.5 to 3 per cent of the price of petrol, whereas missing an electricity prompt payment discount could add more than 20 per cent to your bill.

And "everybody has the opportunity to get a discount", Bennetts says.

Z Energy has a FlyBuys scheme, an Airpoints scheme, a loyalty card with AA, and a tie-up with New World and Pak 'n Save.

"There are 3.6 million passenger vehicles in New Zealand," he says. "There are something like 2.4 million FlyBuys card holders. Air New Zealand has something like 2 million cardholders. There's nearly 2 million AA Smartfuel card holders."

Bennetts says Z is aware of energy poverty in New Zealand, so it has opted for no minimum fill levels to get a discount.

But he knows some people, including people commenting on Z Energy's Facebook page, would prefer the discounts scrapped, and petrol stations offer everyone a hassle-free lower price.

"There's an element of cost and complexity in the market that was not there eight years ago that causes confusion for customers, and leaves come customers feeling like the are in the haves or have-nots," he admits.

But, AA spokesman Mark Stockdale says that's what competition looks like.

Eight years' ago, petrol companies charged much the same wherever petrol was sold, and that was taken as a sign by many that there was weak competition, Stockdale says.

Gull general manager Dave Bodger says it's still a free market. Gull does not have a rewards scheme with a supermarket at the moment, but reserves the right to do so again.

CHRIS SKELTON/STUFF Gull general manager Dave Bodger says many people choose to fill the tank on its discount days, where it cuts the price of petrol in return for getting greater volume of sales.

POOR PAY MORE

So who is among the 30 per cent paying full price?

Bennetts' first category is "people who can't be bothered".

"I'm a cash rich, time-poor person. If I can get in and get out quickly, I go 'Who cares? It's 6c or $2.40. A couple of dollars, and I'm spending a hundred and something anyway, I can't be bothered.

"Customers have never had so much choice as they have today. And some people just don't exercise choice."

There is lower uptake of rewards discounts in lower-income areas, but Bennetts says price-board competition is more intense in price-sensitve areas.

For small fills, the dollar savings feel tiny.

"Some people come and buy $10 at a time," Bennetts says.

That buys less than five litres. A 6c a litre discount would be less than 30c.

"At that level it might not be worth their while," Bennetts says.

AUSTRALIAN LESSON

Not everyone sees fuel discounts schemes as good for competition.

The Australian Competition and Consumer Commission (ACCC) revealed much about the way the discounts schemes work when it investigated in 2012, revealing petrol stations' link-ups with supermarkets gave them not only a lift in volume of customers, but also a flow of money from the supermarkets.

The ACCC feared the power of escalating fuel discounts funded by Woolworths and Coles, paid for out of the margins they charged on groceries, could stifle competition.

When the supermarkets agreed not to fund discounts over 4c a litre, profits in the retail fuel market dropped.

"The retail sector reported net profits of A$495m (NZ$540m) across all products and services in 2013–14, a decrease of 10 per cent in real terms from 2012–13," the ACCC reported.

"Prior to January 2014 Coles and Woolworths funded a substantial portion of their discounts from their supermarket businesses."

DATA MINING

Green says there's quite another element to the discount schemes.

Discount and rewards schemes enabled the petrol retailers to gather data on customers.

"They are not just giving you a discount, you are giving them the information to better target you as a consumer, and you are doing it with a smile on your face," he says.

Bennetts says: "What it enables us to do is have what we call a 'segment of one'.".

A segment of one is marketing speak for knowing individual customers so well, you can tailor your offers to them personally, including, perhaps, one day soon, the price they pay.

"We have some offers under development where we almost start to give our customers the chance to pick the price. We'd almost say 'What price of fuel might you want to buy it at? Why don't you fix that price?"