Petrol prices cause own­ers to feel pain

Matamata Chronicle - - Motoring -

The pain be­ing felt at the petrol pump from high prices is not re­stricted just to mo­torists, said the Mo­tor Trade As­so­ci­a­tion.

The near-record price of petrol is mak­ing life in­creas­ingly dif­fi­cult for many in­de­pen­dent ser­vice sta­tion op­er­a­tors who are al­ready cop­ing with mo­torists frus­trated by the ris­ing price of fuel.

Many in­de­pen­dent ser­vice sta­tion op­er­a­tors work on a fixed mar­gin ba­sis, typ­i­cally around 4 to 4.5 cents a litre.

As the price of fuel has risen in re­cent times, so have many of their costs di­rectly re­lated to fuel re­tail­ing, which they have lit­tle or no con­trol over. Work­ing on a fixed mar­gin ba­sis means that the prod­uct their busi­ness is pri­mar­ily based around is be­com­ing in­creas­ingly un­eco­nomic to sell.

This at a time when the gov­ern­ment takes a larger amount from each litre of fuel when­ever the price goes up: cur­rently taxes and levies ac­count for more than 90 cents of ev­ery litre of 91-oc­tane un­leaded petrol.

For many op­er­a­tors, the cur­rent gross mar­gin on 91 is less than 2 per cent and it is drop­ping with each suc­ces­sive price in­crease.

Mo­tor Trade As­so­ci­a­tion spokesman Ian Stronach said: ‘‘There aren’t that many busi­ness mod­els that work around a fixed mar­gin mech­a­nism like this.

‘‘Many re­tail­ers are able to ad­just and main­tain mar­gins as prices go up but for many in­de­pen­dent ser­vice sta­tion op­er­a­tors this is not a choice, they are trapped with a fall­ing mar­gin ev­ery time the price of fuel in­creases.’’

Ninety-one petrol has in­creased by 44 cents a litre or 25 per cent since Oc­to­ber 2010 trans­lat­ing to di­rect in­creases in the cost of hold­ing fuel and pro­cess­ing fuel sales.

Many sta­tions reg­u­larly re­ceive fuel de­liv­er­ies of up to 40,000 litres at a time which, based on cur­rent costs, could mean ad­di­tional hold­ing costs for the op­er­a­tor of more than $16,000 a load. This fuel usu­ally has to be paid for within 48 hours of de­liv­ery, in­evitably be­fore much of it has even been re­tailed.

As fuel costs in­crease, so does the ten­dency for mo­torists to use card­based pay­ment fa­cil­i­ties rather than cash.

This also adds fur­ther costs for op­er­a­tors as they pay a per­cent­age­based fee when a card is used.

With card pro­cess­ing fees around the 1.25 to 1.5 per cent level, the avail­able mar­gin is quickly con­sumed.

In some cases, de­pend­ing on the type of card pre­sented, when loy­alty schemes are in op­er­a­tion, op­er­a­tors are ac­tu­ally los­ing money on some trans­ac­tions; it is cost­ing them to sell the fuel.

Com­pound­ing the whole sit­u­a­tion is the rise in drive-away thefts. As the cost of fuel has in­creased, so too has the num­ber of mo­torists who are fill­ing up and us­ing stolen, oblit­er­ated or sim­ply no reg­is­tra­tion plates at all, just driv­ing away.

Hav­ing to meet the cost of the stolen fuel means op­er­a­tors are in some cases pump­ing fuel for the next 50 or so cus­tomers to make up that loss.

Mr Stronach said: ‘‘There’s been a big­ger fo­cus lately on the plight of mo­torists and rightly so. But many peo­ple for­get that there are hun­dreds of in­de­pen­dent ser­vice sta­tion op­er­a­tors out there that are find­ing things equally tough.’’

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