Z Energy believes there has never been stronger competition in the New Zealand fuel market.

The finger has been pointed at the fuel company, amid concern petrol and diesel margins have been lifted higher than they've been in nearly 20 years.

Z spokesman Jonathan Hill said they set the price at 200 service stations in the country, but there are around 1500 overall.

He said close to two-thirds of those are family businesses, who set their own prices, and margins are what enable them to stay in business.

Mr Hill said Z made about five-and-a-half cents of net profit for every litre they sold.

While that's an improvement from two-to-three cents a litre margins, it's still very tight, and Hill said the industry is competing harder than it ever has before for customers.

Hill said motorists today are spoilt for choice.

"There are something like sixteen brands in the market competing for customers at the moment, that's more than there's ever been.

"There is a huge amount of discounting taking place off the price board- more than we've ever seen before."

However, yesterday Labour's energy spokesman questioned whether we are being taken for a ride when it comes to fuel price margins.

It comes amid concerns of Z Energy monopolising the market, after the company bought Caltex New Zealand in April for a majority stake in the retail fuel industry.

That gave them more than 50 percent of the retail fuel market.

Stuart Nash said a lack of competition could be to blame, and wants new Energy Minister Judith Collins to investigate.

"If the margins were really skinny then you could understand the price, but the margins are higher than they've been for a long, long time. You sort of get the feeling that were being ripped off to a certain extent I think."