The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Gas station operators are warning they will now have to start slashing staff hours and the volume of fuel they purchase from wholesalers after per gallon prices breached the $6 mark.

Vasco Bastian, the Bahamas Petroleum Dealers Association’s (BPDA) vice-president, told Tribune Business that prices hit $6.16 per gallon at all Esso stations, while at Rubis it went even higher to $6.33. Shell is the only chain where prices are below $6, presently standing at $5.50, but it is likely to breach the $6 mark when it exhausts its current inventory and has to bring in a new shipment.

“We have to now start cutting back on staff hours and cutting back on how much gasoline we purchase from the wholesalers. So, instead of letting people go we may have to stagger shifts, and instead of buying 10,000 gallons of gasoline, we may have to start buying 7,500 or 6,000 just to be able to have gasoline on hand for our customers,” Mr Bastian said.

The spike in gasoline prices was foreshadowed by Mr Bastian several weeks ago when he revealed that exceeding $6 per gallon would cause problems for petroleum dealers. He added that prices are heading towards $8 per gallon by this summer, and maybe even $10 by July if the war between Russia and the Ukraine continues to rage for an extended period of time.

“If you look at how much it has increased this last time, by over 42 cents, if it continues on this trend we are looking at a 50 cent increase to a $1 increase every month or so, and we have to be on top of this stuff,” Mr Bastian explained.

“Whenever you have a price increase, the quantity demanded decreases, but there still is the demand so it would affect the quantity demanded by the retailers. Us retailers have to adjust our bootstraps and, rather than ordering a 10,000 gallon tanker, we would have to order 7,500 or we might have to order a 6,000 gallon tanker.

“We would have to adjust our ordering quantity to try to offset the price. I would encourage motorists that now is the time to fill up and put in your new gas treatment and all the other stuff.” Increasing gas prices strains cash flow for station operators as they have to spend more to purchase fuel from their wholesale supplier, forcing them to tap into available credit lines and repay them when the inventory is sold, only to repeat the cycle all over again.

The Government, which is among the few who benefit from rising gas prices because VAT and its taxes are based on a percentage, has rejected calls to cap its tax take - presently around $1.54 per gallon - as a way to offset rising prices in the short-term and provide some relief for hard-pressed businesses and consumers still struggling to recover from COVID-19 and soaring inflation.

Wesley Ferguson, the Bahamas Taxi Cab Union’s (BTCU) president, said in response to $6 per gallon: “The minister [of transport and housing] is open for discussions with us on a fare rise, so we will need a meeting with her as soon as we can to best address these gasoline price rises. We have to tread lightly because we still don’t know how this thing is going to go. We don’t want to jump the gun.”

Given oil market volatility, Mr Ferguson said that to ask for a fare rise, then come back to the Government and ask for another because gasoline went up more than projected, “would not be prudent”. He added: “A lot of people would get anxious and go and ask for a $2 raise because of the $6 price of gas now, but what if it goes to $10 by the summer? Then we would have to come right back and ask for another fare raise. We have to just be prudent now and watch to see how this thing plays out.”

Granville Collie, managing director of MUTRU, the delivery provider, said: “This gas price rise is a serious thing. We had recently raised our price for delivery fee, but that was based on inflation and everything else. That was before the gas prices started to shoot up.

“I see the Government is also working on that minimum wage increase, but we’re going to try to hold off on any additional increase at this time. Depending on how things go I definitely could see us increasing our rates before the end of the year if nothing changes.”

MUTRU is trying to “absorb” any inflationary increases because it does not want to put customers off from using its service. “We want to add more customers and balance out the burden between multiple orders,” Mr Collie said.