Biting the fuel-price bullet

If he wants to remain in business, Ray Stevens has to bite the bullet and keep his fuel prices at a higher level than those being offered by company-owned outlets.
Mr Stevens, who owns Double S Motordrome at Westmere, said that was the harsh reality he faced even though his supplier, BP, has made much of dropping its prices.
The price drop was started late last week when Shell announced it was pulling back petrol prices by 6 cents a litre across all its pumps - 91 octane and premium fuels.
But Mr Stevens said while BP said it was following suit, he said the oil giant's statement was "questionable".
"Prices for independent operators like me will drop by little more than 3 cents a litre plus GST. And the diesel prices will move little more than half a cent down."
Prices had in fact ramped up last week, by 4c a litre for premium and 2 cents a litre for 91 octane, he said.
Wholesalers such as BP "have to start telling the truth" about what was happening with petrol prices. "If BP has any designs on wiping out the independent operators then this is a quick way of doing it."
Mr Stevens said he had called BP corporate offices to complain about what was going on.
"We're definitely not on the same level playing field. Dropping the price is great for the consumers and I congratulate Shell for taking the initiative. But I have to retain my 4 cents a litre margin on sales otherwise I simply can't survive."
He said his prices could never match those of the company-owned outlets. He does not own the storage tanks at his SH3 service station, renting them off the petrol company and paying monthly rental for them. Those prices had hiked up, too, shifting from $2500 a month (plus GST) to $2800.
He said this was another reason he had to maintain higher prices.
Both BP and Caltex have followed Shell's lead and dropped petrol prices by 6 cents a litre.
When prices moved upward last week Gull did not shift its prices, so has dropped its pump price by 3 cents.
Greenstone Energy, which owns the Shell service stations, said the dramatic drop in the price of crude on May 6 had partly flowed through to the refined product price, which ultimately drives pump prices.
Prices hit a record high after petrol companies increased their prices on May 4. The price of 91 octane petrol rose by 3 cents to $2.21 a litre, or $2.28 a litre for premium.
Last week the AA said continuing price increases could not be justified. Motorists could be excused for being a "little bit confused" when they saw the exchange rate increasing in recent weeks and, if anything, they would be expecting prices to come down.
The petrol companies said the price of refined fuel had risen more quickly than the exchange rate, forcing the hike.
According to AA PetrolWatch, the price of petrol has risen 21 cents per litre - or 10 per cent - this year.