The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Gas station operators have their “backs against the wall” after returning to 24/7 operations due to the continuing wait for an increase to their price-controlled margins.

Raymond Jones, the Bahamas Petroleum Dealers Association’s (BPDA) president, told Tribune Business the body has already approached the Ministry of Finance over the need for its members to have a margin increase - something that has not occurred for a decade.

He said: “This margin increase is necessary when you look at the fixed-price fees and the fixed-price margin that is there. When you look at the cost of electricity and the cost of supplies, the retail business for gas stations depends heavily on store sales.

“The base salaries, your National Insurance Board contributions and your operating expenses, along with reduced sales and reduced volumes in gas, it all has a negative impact and increase in cost.” 

Besides the fixed costs associated with operating a gas station, Mr Jones said one-off items such as pump repairs and related costs also impact the bottom line. “The cost of those repairs doesn’t go down,” he said. 

“What we are trying to do is find a way where we can adjust our margins given the market conditions. The cost of living has gone up on everything else. The freight we import to provide equipment to the stations, uniforms, everything has now escalated and we’re still at the same 54 cents [per gallon].” 

Mr Jones did not specify the margin increase that dealers are seeking, adding that the Association will determine that following discussions with Ministry of Finance officials. “I’m expecting a favourable outcome from our discussions, but we can’t look at this every ten years,” he said. 

“We’re going to talk about different mechanisms. We’re not saying it should go up by 100 percent. We will look at it, and speak to the Government with regards to some reasonable number that’s going to give us the ability to maintain profitability.” 

Many observers have argued that gas station dealer margins should be calculated as a percentage, rather than a flat figure per gallon of gas, and/or indexed to inflation and the cost of living to give them a better chance of profitability in a price-controlled industry.

However, with the economy still very much in post-COVID recovery, and prices generally increasing due to global supply chain woes along with rising energy costs, the Government may be reluctant to grant a margin increase at this time since it will impact all Bahamians via greater transportation costs.

The last time petroleum dealers enjoyed a margin increase was in 2011, when the Hubert Ingraham-led Free National Movement (FNM) government granted a 10 cent increase per gallon of gasoline to take it from 44 cents to 54 cents. A 15 cent increase per gallon of diesel was also allowed.

Vasco Bastian, owner/operator of the Esso East Street and Soldier Road location, and vice president of the association, added: “I wish the Government could help us out with a little margin increase. We need it. We haven’t had an increase in over ten years and we are desperate now with our backs against the wall.”

Resuming 24-hour operations after the nightly curfew’s end has not caused gas stations to “take off” yet, but “every dollar counts” as customers slowly trickle in at later hours.

Mr Bastian said: “It’s too early to really say anything with regard to going back to the 24-hour service, but people are gradually coming back and I hope it can get back to the pre COVID-19 levels really soon.” 

Returning to a 24-hour operation means operating costs have also increased, with Mr Bastian saying: “We have to have more staff salaries, you have to spend more on electricity, you have to pay for security. Costs have increased across the board.” 

Mr Jones added: “Nothing significant has changed since going back to the 24-hour operations. It is nothing significant compared to what we have seen in the past pre COVID-19. 

“I think there are some people out there still getting used to working later, and I think unemployment is still a factor and there are people who are not working full weeks, so there’s still a limitation in their income. 

“So until those numbers come down in terms of unemployment, or the number of people employed goes up, we won’t see a real increase in people spending money for gasoline. I’ve spoken to other dealers and they are telling me people are spending $5 to $10, and they would sometimes come to the station twice in a day as opposed to filling up one time.”