AACS: FUEL FALSEHOODS OUTRAGEOUSLY UNFAIR

August 25, 2016: The Australasian Association of Convenience Stores (AACS) stands strong in the corner of petrol retailers unreasonably and unfairly accused of price gouging, reinforcing that fuel is a low margin product and margin increases correlate directly with an increase in operating costs for these businesses.
AACS CEO Jeff Rogut said recent misleading claims of high margin growth not only paint retailers in an unfairly bad light, they ignore the facts that margins on petrol remain relatively unchanged in the past decade.
“Fuel price fluctuations ebb and flow in direct correlation to external price pressures and the ever-increasing cost of doing business. Our industry is certainly not unique in this regard, so it makes no sense and is absolutely unfair for a body with the influence of the ACCC to demonise and embarrass responsible retailers in such a public fashion,” Mr Rogut said.
“Suggestions that petrol margins have spiked in recent years are unfounded and frankly untrue. The figures quoted by the ACCC fail to take into account additional costs to meet regulation and compliance requirements and do not reflect actual cash flow.
“Petrol stations must safely handle hazardous materials, they must account for vapor control, they must justifiably meet strict safety and compliance standards, and they must do this in the context of a highly competitive environment. Since 1970, the number of Australian petrol stations has fallen from 20,000 to just over 6000. The cost of investment in developing new sites is significant.
“Stores have upgraded equipment and employed baristas in some cases to improve the customer offer. Yet these operating costs have not been accounted for in the recent margin figures quoted by the ACCC.
“The pointed remarks made in the media don’t tell the real story but instead hang retailers out to dry in a reputational sense. It is time for Governments, the ACCC, other authorities and the media to stop treating retailers like criminals,” Mr Rogut said.
Mr Rogut said average retail fuel margins as reported by its many national members increase over time only in direct correlation with the cost of doing business, in exactly the same way businesses in other industries and sectors adjust margins in response to changes in operating costs.
One AACS member, a service station operator with licensees – small business people – in multiple states, reports that its gap between net retail margin and operating costs has barely moved over the last ten years.
This is against the backdrop of an ever-changing retail environment for these businesses, in which they must also deal with aggressive tactics from the major grocery chains and sales pressures in traditional categories. “In a sense, the ACCC has diminished competition in the marketplace because of their approval and long term support of predatory and discriminatory supermarket shopper dockets; this unfair competitive environment created by the ACCC has led to the demise of many independents and competition”
“Operating costs for petrol stations continue to grow as these businesses evolve to meet the growing needs and constantly changing demands of their customers,” Mr Rogut said.
“The margins that small businesses derive from the sale of petrol are very low, but it is an important service to offer to consumers to encourage the purchase of additional items. Surely these small business people should be entitled to make a profit to support their families, their staff and themselves.
“It is grossly unfair for Government bodies to misleadingly accuse retailers of price gouging – when the facts clearly show the opposite – then refuse to implement any real deterrents nor even recognise that another $55 million annual cost burden – stealing petrol – is a crime that requires a coordinated effort to tackle.
“No matter which perspective, retailers bear the brunt of financial damage and are still portrayed as the bad guys anyway. It has to stop. The AACS calls on the ACCC to cease labelling small businesses as greedy when it is demonstrably not the case,” he said.
In order to provide clarity to the fuel pricing process, the AACS has made a series of resources available to the public at www.aacs.org.au/aacspetrol/ .