Petrol prices cause owners to feel pain
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.’’