The Commerce Commission is keeping a close eye on petrol prices.

It's asked fuel companies to 'please explain' the differences in prices between and within various cities.

Ruapehu Mayor Weston Kirton called for an inquiry into petrol price inequity three months ago.

Commission chair John Small says this is likely to come down to competition.

"What we need to do is find ways to promote local competition. It could be something inventive, like local buying groups, it could be talking to councils about freeing up land."

LISTEN ABOVE