Fuel retailers not happy about drop

SA has seen successive price reductions since September.

Peter Morgan, CEO of the association, yesterday said retailers with excess stock when prices drop had to sell that at a loss. “Everything underground when prices drop must be sold at a loss. Retailers lose money. It is as simple as that,” he said.

He said that in the event of fuel price adjustments, whether an increase or a decrease, fuel retailers found themselves in a no-win situation. “One will argue that they should benefit when the price increases. But they do not. Consumers find out on the Friday if there will be a change in the fuel price the next week. If there is going to be an increase, that triggers a rush by motorists to fill up before the increase,” Morgan said.

The minerals and energy department last week announced large decreases in prices of petrol, diesel and illuminating paraffin.

Engen retail business manager Kevin Sheel yesterday said retailers lost money on the fuel on hand when the price dropped. “It is a huge cash flow demand for dealers. We generally manage our stocks down,” he said.

On the upside, dealers benefited from price decreases because of the increased margins which depend on the litres sold, Sheel said. “For the same amount of money that the motorist spends to purchase fuel, the dealer gets more margins. So in the long run, the dealer should be able to see some profits,” he said.

Source: Business Day

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