fuel retailers seek increase in margins 
02 June 2008

According to Fuel Retailers Association CEO Peter Morgan, rising fixed costs and a drop in fuel sales with prices rising are squeezing the profits of fuel retailers and threatening the industry financially.  The minerals and energy department announced a 5c a litre rise in the retail margin on Friday. Before the increase, fuel retailers could keep 59,7c for every litre sold. This has risen to 64,7c a litre.

Morgan said the 5c increase was less than half the 11,94c margin had retailers asked for. “We are thankful for the 5c but this is not the end of the matter. We will ask for more.”
Departmental spokesman Bheki Khumalo said yesterday officials were scheduled to meet representatives of the fuel retail industry tomorrow.  Morgan said the industry would raise its call for increased margins at the meeting. The department last increased the retail margin in September, he said. Recent fuel price rises led to a similar upward trend in fixed costs for retailers.

Retailers had seen a slump in fuel sales as motorists felt the effects of rising petrol and diesel prices. “People are not filling up as often as they used to. So we are caught between rising fixed costs and falling income,” Morgan said.  Khumalo expressed the department’s concern at “unacceptably” high international oil prices behind frequent fuel price increases.

“Normally, high prices are associated with challenges of supply. That is not the case at the moment. There is no shortage of supply. We believe that geopolitics and commercial interests are pushing up the price of oil,” Khumalo said.

In its fourth-quarter economic perspective report last year, Absa blamed speculative trading for “a significant portion” of the high international oil prices.  On Friday, the department announced further fuel price increases because of soaring international oil prices.

The price of petrol will rise 50c a litre at midnight tomorrow. Last month’s hike was 55c a litre.  T
he price of 0,05% sulphur diesel would rise 71c a litre, while the 0,005% version of diesel would go up 70c a litre, the department said. 
The wholesale price of paraffin would rise 71c a litre.

Siseko Njobeni, www.businessday.co.za