The Tribune

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net BAHAMIAN petroleum retailers yesterday said they feared "a beating" from global oil prices that have surged back over $100 per barrel, due to the ever-increasing demands this places on their working capital in purchasing product from the three wholesalers. Interim president of the Bahamas Petroleum Retailers Association (BPRA), Philip Kemp, told Tribune Business: "It just means more of a challenge, because as fuel prices rise it puts more demand on your working capital. That's what happens when the price goes up. The guys who are struggling are going to continue to struggle." Last October, the Government increased gasoline and diesel margins by $0.10 and $0.15 per gallon, respectively. Gas retail margins had been previously fixed at $0.44 per gallon of gasoline and $0.19 per gallon of diesel. Gasoline now stands at $0.54 cents per gallon, and is $0.34 cents per gallon of diesel. The BPRA had asked for an increase of $0.74 per gallon for gasoline and $0.47 per gallon for diesel. "Since we got the margin increase there were one or two retailers who went out of business for four to five weeks, but were able to open up again. The increase was a help but it didn't solve all of the problems," Mr Kemp said. He added that while the Government had promised to appoint a Commission to determine whether the Bahamian petroleum industry should be deregulated, and price controls removed, that has not happened. Mr Kemp said he did not expect it to happen until after the election. Retailers operating under the fixed margins are expected to not only generate a profit but cover rising fixed costs, such as labour, electricity bills and the various fees payable to the oil companies - rents, royalties and franchise fees and the like. Gas price currenlty hover around $5.40 per gallon. Bernard Dorsett, owner of Porky's Texaco Service Centre on East Street, told Tribune Business that when fuel prices go up, retailers have to then find more money to pay for product with no profit. "We have a fixed margin," he explained, "so when fuel prices come down we can make money, but when they go up we have to find more money to make the same money. "I can't make money in a service station. I'm a contractor. I have close to about 30 people employed in my service station, but I only provide employment for them because I can't make a living in there." Mr Dorsett added: "I understand that fuel prices went up again by 20 cents. If we could get fuel prices back down under $5 we could pay some of our bills, but when we get to $5.40 we are way overboard. When fuel prices drop our investment goes down, so at least we are spending less money to make the same money. When fuel prices go up we get a beating. "My position always was to deregulate fuel. Whereas businessmen we could convert fuel prices to where we make a percentage of our costs, when it goes up it, goes up as a percentage, and when it comes down, it comes down as a percentage and nobody gets hurt. As fuel prices go up now with a fixed margin you have to keep looking for money' you have to increase your overdraft to buy fuel. I'm all for deregulation. I think that's the way to go.