Fuelling the call for deregulation
THE decline in the petrol price last week will have come as a big relief for many motorists. However, the fuel strike has not made it easy to pass on the savings to all motorists.
Motorists vented their anger recently at a BP station in Waterkloof Ridge, Pretoria that was charging a massive R14/ for diesel. The price of diesel is not as regulated as that of petrol.
Some even challenged the manager of the fuel station to explain the high price, with one advising on social media that he was told it was to “recover losses” incurred by the fuel strike.
In an official response posted on Facebook, the owners of the fuel station refuted that, stating “it was an innocent error that was immediately rectified once the shareholders were made aware of it. Human error and miscommunication was to blame.”
Motor News spoke with Ian Ferreira, one of the managers in charge of the fuel station in question, who advised that it had been dry for five days as a result of the industrial action and they had been forced to source fuel at a higher price from an alternative supplier. That fuel was sourced a day before the price decrease, with the blessing of BP, according to Ferreira. In a bid to minimise the loss, the owners of the station charged a higher price than that on the day of the decrease, although they state it should have been R13.01/ not the R14 charged in error.
It is clear from the situation that the owners of the Waterkloof Ridge BP took a business decision to try to ensure supply to its customers, but understandably they were unwilling to make a substantial loss on the fuel that was sourced at a higher price, particularly after five days without stock of fuel in the tanks.
Subsequently, fuel has been delivered at the decreased price and Ferreira says the price of diesel is again comparable with that of other retailers.
While the owners of the fuel station have apologised for the initial error, it again highlights the issue of pricing in the fuel retail industry. No doubt many customers chose to utilise rival forecourts in the area, but generally motorists are not able to shop around for fuel based on price, being only able to choose based on product.
We have joined the many calls over the years for the fuel retail industry to be deregulated. It is one of the few industries in SA that is immune to the concept of free and fair competition, not necessarily because the fuel companies do not want to have competitive pricing, but because the government does not allow it.
In many other parts of the world, fuel stations are able to set their prices in a bid to attract customers. In the UK, supermarkets such as Sainsbury’s and Tesco revolutionised the industry when they established their forecourt businesses, often substantially undercutting traditional fuel retailers such as BP, Esso, Shell and Texaco.
In SA Pick n Pay has been trying to do the same for years, but its attempts have been blocked by regulation.
In some cases the opposite is even true. Many highway retailers in Europe charge more than the high street because they have higher running costs but a captive market.
In SA the lack of price competition in the fuel retail industry continues to be unacceptable. It is the consumer who loses out.
Mark Smyth