An inquiry into petrol margins will inevitably raise questions as to why prices vary so much from one town to another, and whether some regions are being ripped off.

New Energy Minister Judith Collins is expected to announce a government inquiry into petrol margins in the coming days, probably led by the Ministry of Business Innovation and Employment (MBIE).

The first official look at petrol price behaviour in New Zealand in the best part of a decade, it follows Opposition claims that consumers appear to be being ripped off, as margins soar.

Collins has vowed to "get to the bottom" of rising margins, signalling that "actions" would be announced this week.

WHAT HAS PROMPTED THE INQUIRY?

Few things affect household budgets like fuel prices, making the issue highly political. Even those of us who never drive are affected by them, with the cost of transport affecting the price of virtually every good we buy to some extent. If Kiwis think they are being ripped off, politicians must be seen to be acting.

Collins' comments so far point to signs that the margins fuel companies are charging are increasing "when there seems little justification for it".

The MP for Papakura is referring to figures published by MBIE which suggest the margins on petrol have virtually doubled in five years. The figures suggest margins rose by at least another 2c a litre in 2016.

The Opposition can probably take some credit. Labour energy spokesman Stuart Nash has been persistently pointing to rising margins for at least two years, claiming in 2015 that motorists may be being ripped off by "unscrupulous merchants". But Nash's calls for a select committee inquiry appear set to be dashed.

ARE FUEL MARGINS RISING?

Depending on the time period, fuel margins have certainly increased. Z Energy, which has found itself as the de facto industry spokes-company acknowledges that profitability today is far stronger than it was when it was created through the purchase of Shell's New Zealand retail business in 2010.

But Z Energy disputes that margins are still rising, saying its profit per litre is flat on a year ago. Even Collins has acknowledged that there is dispute between the official figures and the industry and the true position is not clear.

The industry argues official figures are not fully taking into account the real extent of discounting, both regionally and through a growing number of loyalty schemes. Effectively, the argument is that neither MBIE, nor anyone else, knows exactly what motorists are paying for fuel.

ARE NEW ZEALAND DRIVERS BEING RIPPED OFF?

Ultimately, whether Kiwis as a whole are paying too much for petrol is a judgement call around the acceptable return on investment.

Profits are undoubtedly higher than in the past, but there are signs that prices were effectively too low a decade ago.

Back in 2010 petrol stations were closing across the country, with fuel companies cutting back on investment. Shell sold out of New Zealand in 2010, Mobil is understood to have attempted to sell soon after and Chevron sold Caltex in 2016. If profits are so good, why do the multi-nationals want out?

But a tipping point may have been reached. The owners of the Australian Caltex business have applied to buy discount operator Gull, suggesting that there is enough value in the market to build a business. Other small players such as Allied and NPD are expanding, while the large players are building shiny new stations, which increasingly resemble small supermarkets.

ARE SOME REGIONS BEING RIPPED OFF?

Whatever the national picture is, the degree to which prices vary from region to region is not, in many cases, linked to the cost of supply.

While the price at most stations in Wellington - just a short distance from import terminals at Seaview - is currently $2.07 a litre, stations in Rotorua are believed to have been selling petrol at less than $1.65 a litre this month.

Real estate prices in the capital may be higher than in the Bay of Plenty, but this is not the answer to the difference. In reality it appears that in areas where a discounter - usually Gull - has a strong presence, the major players are able to largely match it on price.

This could lead to the conclusion that in some areas, largely the upper North Island, petrol companies may effectively be losing money selling fuel, while in others, such as Wellington and Christchurch and other South Island centres close to import facilities, profits are healthy indeed.

WHAT ACTIONS COULD FOLLOW FROM AN INQUIRY?

Politicians have the power to regulate prices of virtually everything, but it seems highly unlikely that the Government would choose to go down this path, whatever conclusion an inquiry might come to.

More likely, the Government would use public pressure and the possibility of regulation to attempt to apply pressure to the petrol companies to make changes, or at least to point the finger of blame.