Independent servos ‘getting strangled’ by discounters and rates

Independent service stations say they’re facing a double whammy of competition from discount fuel retailers and rising commercial rates.

And it’s this double whammy, they say – not profiteering – that explains their relatively high prices.

They were forced to defend themselves after the ACT Chief Minister threatened an unprecedented intervention in the territory’s fuel market.

‘Laughable’

The Independent Competition and Regulatory Commission’s draft report on fuel prices found that Canberra’s service stations were making nearly double the profit of those in nearby regional towns.

But Scott Desmond, who manages the Caltex Independent in the outer suburb of Fyshwick, dismisses rumours that operators are making profits of up to $800,000 a year.

“That’s laughable,” he told the Canberra Times, adding that most small operators “weren’t trying to print money or drive Porsches”.

“I’m not Coles or Woolies,” he said. “We don’t have the negotiating power of 50 lawyers. We’re just a family business trying to make an existence. As a small guy, I’m getting strangled here.”

‘Total insanity’

Mr Desmond says that, despite his service station’s name, his only link with Caltex is that he buys its fuel.

He claims comparing his prices with those of discount sites like Costco and Metro is so unfair it’s “total insanity”.

“Yes, I’m an independent and I want to do the best price possible,” he said. “But I can’t compete with Costco because effectively they’re a fuel wholesaler. They’re providing their own fuel 15-30 cents cheaper a litre than I can even buy it.”

Getting fuel delivered to Canberra adds 3-4 cents per litre compared with about one cent in Sydney, he claims.

130 per cent rate rise

But Mr Desmond identifies his commercial rates as “the real killer”. He says these have risen about 130 per cent in the past five years.

“The theme from the fuel inquiry is that independents will save the day,” he said. “But our rates are about $86,000 an annum – 66 per cent more than 2km over the road in Queanbeyan. That’s 66 per cent more I have to make on fuel sales – and that’s before wages and expenses.

“I don’t benefit from the payroll tax cuts. I’m a service station. I have massive amounts of concrete for trucks to pull up on and park, and two staff.”

A draft report of a parliamentary inquiry into fuel prices is due soon.

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