Following the release of a Commerce Commission draft report suggesting the retail fuel market in New Zealand is not competitive enough, the Government has come out swinging.

It is accusing fuel retailers of "fleecing" their customers.

The Prime Minister is reported as saying: "Our instinct was certainly that New Zealanders were being fleeced at the pump, now the Commerce Commission has confirmed that that is true."

"I can tell New Zealanders we cannot stand by as they are facing that pressure at the pump and while they are being fleeced."

The report is a long and detailed one and does seem to make the case this market may not be competitive enough.

But the Prime Minister should be careful about flashing the word 'fleecing" too aggressively.

That is because voters notice the fuel price at the pump.

And it is easy to compare pump prices weekly using the Government's own analysis as published by the Ministry of Business, Innovation & Employment.

Regular readers will know that we track this weekly release and chart the key components here.

And it clearly shows that from the time the current Government was elected, pump prices have risen 15.2% in almost two years, and far higher than the 3.6% rise in inflation in that time.

Petrol buyers know that the cost of fuel is made up of three essential components:

- the cost of crude oil

- the cost of importing, refining and distributing the product

- taxes imposed on ourselves as duties, levies, regional taxes and GST (with part of the GST being a tax-on-a-tax)

And we can track those changes over time, identifying the main drivers of that +15.2% rise.

Nationally, this is what the data shows:

25-Aug-17 9-Aug-19 change cents per litre cents % Retail price, discounted 185.65 213.95 +28.30 +15.2% Crude oil in US dollars 50.20 57.36 +7.16 +14.3% Crude oil in NZ dollars 69.14 88.28 +19.15 +27.7% Import, refine, distribute 25.81 20.51 ( 5.31) -20.6% Government taxes 90.70 105.16 +14.46 +15.9%

The largest cost rise affecting the pump price is for crude oil. But that is not because of the international price, rather it is due to the fact that the exchange rate has moved significantly against us. In August 2017 NZ$1 was worth US72.6 cents. On August 9, 2019 it was down to just US65c. Clearly we need to spend more New Zealand dollars to buy the same volume of crude oil. No-one in New Zealand can really control the cost of crude oil, and international forces set our exchange rate.

The next largest rise is from taxes. This is something the Prime Minister can directly control. And Government actions have caused this to rise almost 16% over this period.

In the same period we have seen aggressive fuel discounting. It may well be the case that there was plenty of room to discount the product as the Commerce Commission suggests. But it has clearly been discounted over the two years. In spite of the rising costs, the retailers now take less than 10% of the pump price to import the product, refine it, distribute it and market it. And they make a profit doing so.

But you can't hide from the fact that this is the smallest component of the pump price.

The largest component, is the one controlled by the Government and is the one growing very much faster than inflation.

It is clearly wrong to conclude that the fuel retailers are 'fleecing' their customers. It is not 'fleecing' when they reduced the share of the pump price by 21%.

So what should we accuse those who have increased their take at the pump by 16%? Gouging?

The Commerce Commission seems to have done good work identifying some potential market issues.

But loose and inflammatory accusations made for cheap political points scoring undermines that work when it is clear to any motorist filling up at the pump that the sharp rise in prices has nothing to do with the fuel retailers, and all to do with the politician making the accusation.

If anything, by reducing their share of the pump price, those retailers gave the Government cover to raise taxes even more aggressively. They are certainly not getting any thanks from the prime suspect. Sadly, today's outburst fits the modern political strategy of accusing your opponent of your own flaws.

Back to the detail, we can extract the Auckland component from the national table above because they pay a regional fuel tax, and then also reveal the same data for the rest of New Zealand without Auckland, which at the moment is not paying any regional fuel taxes.

Auckland 25-Aug-17 9-Aug-19 change cents per litre cents % Retail price, discounted 185.65 222.55 +36.90 +19.9% Crude oil in US dollars 50.20 57.36 +7.16 +14.3% Crude oil in NZ dollars 69.14 88.28 +19.15 +27.7% Import, refine, distribute 25.81 20.51 ( 5.31) -20.6% Government taxes 90.70 113.76 +23.06 +25.4%