The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian petroleum retailers are pledging to pass any reduction in oil prices on to motorists as they continue "private" discussions with the Government over their calls for a margin increase.

Vasco Bastian, the Bahamas Petroleum Retailers Association's (BPDA) vice-president, told Tribune Business that gasoline prices being well below last summer's high of $7.39 per gallon is a “good indication” of motorists being able to travel at ease with lower pump prices. “Wherever oil prices land, we will certainly pass those savings on to the consumer,” he added.

Diesel prices have been rising compared to gasoline. "Diesel, because there is so much heavy stuff and equipment moving around the world, and logistics going up along with those big cargo vessels doing more around this time of year, the product is seeing an increase in demand," Mr Bastian said.

He also confirmed that talks between the industry and the Government to address the former's woes are ongoing. “We have been meeting privately with the Government on our concerns for the industry and I have to say things are looking positive for us," Mr Bastian said.

"The Government has been very accommodating to us, and we are hopeful that a resolution to this impasse will come shortly. Our president has been having some impromptu meetings with the Government and I am hopeful that he is getting the job done.”

Raymond Jones, the Bahamas Petroleum Retailers Association (BPRA) president, previously told this newspaper that gas station operators are seeking a margin increase equal to 7 percent of the landed cost of fuel as their equivalent of a livable wage.

He added then that such an adjustment was critical “to allow us to survive as retailers” given that existing price-controlled fixed margins simply cannot cover a multitude of ever-increasing costs. Believing that “the Bahamian public will be OK to absorb a few cents more” on the per gallon cost of gasoline, he provided several insights into the increasing hardship faced by many gas station operators due to an inflexible business model that has left many unable to break even.

Mr Jones said turnover-based Business Licence fees have almost doubled year-over-year due to last year’s spike in global oil prices following Russia’s invasion of Ukraine, which saw gas prices peak at around $7.20 per gallon during the 2022 first half. Noting that his fee has increased to almost $25,000, he estimated that “99 percent” of the Association’s members would be unable to make payment this year and would be seeking to agree payment plans.

Mr Jones said he had informed the Prime Minister then of how one gas station operator was using his pension money to cover operating costs and maintain staffing levels due to insufficient margins.

The last margin increase enjoyed by gas station operators occurred in 2011, some 12 years ago, under the last Ingraham administration, and operating costs and inflationary pressures have increased substantially then. That took gasoline margins from 44 cents per gallon to 54 cents, where it has remained ever since, while diesel stands at 34 cents per gallon.

Mr Jones contrasted the industry’s inflexible, price-controlled fixed margins with the food distribution sector. While much of the latter’s produce is price controlled, retailers and wholesalers have percentage-based - rather than fixed - margins and mark-ups that allow them to apply for cost increases as the landed costs change.

Listing the ever-rising costs that fixed gasoline and diesel margins must absorb, Mr Jones pointed to the 2-3 percent “commission” or fees charged on every debit and credit card payment. On a $6 gallon of gasoline, the 3 percent charge amounts to 18 cents or one-third of the 54 cent margin, although this might be slightly less depending on the issuing bank.

With The Bahamas still largely a cash-based economy, he added that some gas station operators are being charged between $4,000 to $10,000 a month to deposit cash. With banks unwilling to accept such deposits over the counter, the industry is now incurring fees for doing this via the night deposit box.

And, with many of the petroleum industry’s 1,000-plus employees earning the minimum wage, Mr Jones said their has increased by 24 percent or $50 per week due to the increase. While not opposed to the rise, he added that this has increased payroll costs for gas stations while also raising associated National Insurance Board (NIB) contributions.

To maintain the “spread” between minimum wage employees and others, gas stations have been forced to raise pay for cashiers as an example. Security costs have also increased, as third-party contractors pass the minimum wage’s impact on to gas stations and their other clients.