The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Petroleum dealers yesterday warned they may have to cut back on the amount of fuel they order, and move to self-service on some days, to ease the impact from soaring global oil prices.

Vasco Bastian, the Bahamas Petroleum Dealers Association’s (BPDA) vice-president, told Tribune Business that if the cost of 10,000 gallons goes above $60,000, or $6 per gallon, gas stations will have to consider reducing how much they buy from wholesalers - Esso, Rubis and FOCOL Holdings (Shell) - as well as go to self-service several days per week.

Presently, a 10,000-gallon tanker of gasoline costs Bahamian petroleum dealers just over $50,000, Mr Bastian said. With these prices likely to rise further after the US moved to cut-off all Russian energy supplies in response to the Ukraine invasion, Mr Bastian warned it will become increasingly for dealers to operate at these higher costs with margins fixed at $0.54 per gallon.

“If you see the price of gas go up to $7, then it makes no sense for dealers to operate as they have been,” he argued. “It just makes no sense. Because, right now, if you buy 10,000 gallons of fuel from a wholesaler, right now it’s costing you $50,000.

“And, if you multiply that 10,000 gallons of gas by 0.54, then dealers only make $5,400 profit on fuel they have just spent $50,000 on. If a 10,000-gallon tanker goes up to $60,000, then you can’t buy a 10,000 gallon load any more; you would have to buy a 5,000 gallon load or something like that.

“But you can’t afford to buy a 10,000 gallon load at $60,000. You won’t be able to afford that. You would then have to decrease your purchase quantity and, once you decrease your quantity, your demand will increase. So you are going to feel it in the economy,” Mr Bastian continued.

“At the end of the day, this is not making any sense. So we might have to look at self-service to get us through this crisis. We want to preserve the jobs for Bahamians, but we might have to go to self-service now for a couple of days out of the week, or we have to ask the Government to reduce their VAT on gasoline.

“Right now the Government gets two sets of VAT from the petroleum business; they collect VAT from the wholesalers, and then they collect VAT from the dealers and retailers. So it’s a double tax for the same set of fuel.”

He added that the Government currently collects $1.54 for every gallon of gasoline sold in The Bahamas. “It’s the Government that makes the most money in the petroleum business, not us dealers,” Mr Bastian asserted.

When asked if fuel shortages will result, he said: “The Bahamas will never run out of gasoline. The people that run the wholesale operations here from Esso, to Shell and Rubis, they have competent people leading those companies. The Bahamas will never be at risk of running out of gasoline.”

While the Association has been lobbying vigorously for an increase in dealer/retailer margins, no administration seemingly has the appetite to grant this request.

Mr Bastian said: “We need the Prime Minister, along with his minister for economic affairs, to sit and talk with the dealers, not the wholesalers, but speak with the dealers.”