The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian petroleum retailers will be on Bay Street to protest the Government’s “unconscionable” failure to approve a margin increase vital to their survival when Parliament resumes next Wednesday. 

Bernard “Porky” Dorsett, owner of Porky’s Rubis Service Centre, told Tribune Business yesterday the Cabinet Office has given formal permission for station operators “to demonstrate” when MPs return from their summer break as frustration over seemingly being the only industry “in the world with the same price after 13 years” boils over.

With merchants “stuck” on the same inflexible, price-controlled margins since 2011, he argued that the Association’s 30 members desperately need a rise “to be able to live in this business with everything going through the roof” on operating expenses via the likes of Bahamas Power & Light (BPL), National Insurance Board (NIB) and minimum wage cost hikes.

Raymond Jones, the Bahamas Petroleum Retailers Association’s (BPRA) president, confirmed the planned protest to this newspaper while asserting that the Davis administration has failed to implement the 25 cent per gallon of gasoline margin increase that the industry thought had been agreed by both parties in July.

He backed Mr Dorsett’s assertion that the industry’s 54 cent and 34 cent gasoline and diesel margins, respectively, have been “decimated” by ever-increasing inflation and costs that have left them unable to cover operating expenses from the mark-ups that the Government allows. 

“We’re just going to stand around and talk, and just continue to raise our concerns about the lack of progress and lack of action by the Government,” Mr Jones said of the protest planned for Parliament Square on Wednesday, September 18.

“We met with them, we were under the impression talking to everyone - the minister responsible [Michael Halkitis], the Prime Minister and the financial secretary [Simon Wilson] that the deal we negotiated was completed and they just needed to bring it to Cabinet to get it signed-off.

“We had laid out everything. Twenty-five cents per gallon, it’s not a major win, but in the interest of getting aid to retailers whose fixed margins have been decimated by rising costs, we said: ‘Let’s get this done’. The dealers are in desperate need of an increase,” he continued

“We asked for more. The Prime Minister said he cannot do that because of the increased cost to consumers. We negotiated, we got proposals, we exchanged proposals, we accepted this proposal, they changed it, and we said: ‘Get it done. We need relief’.”

However, Mr Jones said the Government has yet to follow through and enact/implement the 25 cent per gallon of gasoline increase that the Association thought had been agreed. Michael Halkitis, minister of economic affairs, could not be reached for comment before press time last night.

“We’re still here struggling, waiting for the Government to do something they agreed to do, but they’ve not made the final decision to enact it,” Mr Jones added. “Our understanding is they don’t have to go to Parliament to do this, and the Opposition supports this.”

The Association chief argued that granting a 25 cent per gallon increase will “not break the bank for our people. Twenty-five cents a gallon, that’s less than what someone spends buying a beer or on a can of soda. At the end of the day, it’s not a hard decision to make. We need to help these people. The Government has done it for the taxi drivers, the pharmacists and everyone else.”

Mr Dorsett, who opened his Bamboo Town gas station on East Street the year before The Bahamas became an independent nation, told Tribune Business that “even the peanut boy” has been able to increase prices to offset increased operating costs but not petroleum dealers. A further squeeze resulted when his sales volumes fell by 70,000 gallons year-over-year for 2023.

Unlike virtually all other industries, gas stations have to contend with inflexible, fixed margins that are price controlled by the Government and which prevent them from increasing gasoline and diesel prices to compensate for higher costs. Mr Dorsett yesterday disclosed he first argued for these to be switched to a percentage-based, rather than fixed, margin more than 40 years ago but to no avail.

Now, given the sector’s financial struggles under its existing financial model, Mr Dorsett voiced doubts over whether he will pass Porky’s Rubis Service Centre on to his grand children. He added that the Government, based on the current $5.70 price, is making more per gallon in VAT (57 cents) than the dealers are earning on their gasoline margins (54 cents).

“It’s been 13 years since we’ve been able to add pennies on to our margins,” he disclosed. “It was 2011 when we got the last increase. Everything has gone up. The peanut boy has got a dollar on his peanuts; you cannot buy a peanut for less than $2.”

Mr Dorsett said the operating environment has become especially challenging since the post-COVID cost of living crisis with its inflationary pressures. With gasoline prices having dropped to around $4 at the time the pandemic hit, he added that subsequent global oil price rises have forced dealers to pay more to acquire their fuel supplies from the wholesalers - Rubis, Esso and Shell - but their earnings remain the same.

“We double our investment to make the same money,” was how he explained the fixed-margin impact. “We have minimum wage that’s gone up, we have NIB that’s gone up, and we have light bills that have gone through the roof. It’s been more difficult to run the business.

“We’re getting 54 cents per gallon of fuel. The Government’s VAT is higher than our margins. The Government is making more money on VAT than we are making. My gas is at $5.70, and the Government is making 57 cents and they have no business to run.

“I continue to say that it’s time for them to get their foot off of us... You’re asking us to operate on the same margin after 13 years. That’s unconscionable. Nothing in the world is at the same price after 13 years. That’s our concern,” Mr Dorsett told this newspaper.

“I told them [other retailers] not to go to the Prime Minister any more. We need to get out and do a demonstration. We’re reasonable people. I’ve been in this business 52 years. I opened this store in 1972, the year before independence. I tell them that I don’t know if I will pass this business on to my grand children; not my children, my children’s grand children. Running the business now, it’s rough.

“My concern is that most of the guys have to continue refinancing their business, trying to keep their business afloat. The overdraft facilities that the banks are charging, the bank fees, the transaction fees, everything is going up. It’s been a hassle. If I was able to make an extra 30 cents on a gallon of fuel I would be happy.”

Mr Dorsett signalled that the tightening financial pressures will prompt some dealers to cut staffing levels or reduce opening hours. He estimated that Association members, on average, employ around 30 persons which would make for a total sector workforce of around 900.

“If we go to self-service, we will have three shifts, and would only six people rather than 30 people to be working. The Government will then have to start worrying about paying unemployment benefit to those people. We don’t want to send those folks home, but they’re making it unconscionable for us to live. That’s our concern,” Mr Dorsett said.

“That’s the message we plan to take out. We need to be able to live in this business. Everything has gone through the roof, and your lead item in your store, you can’t live from it. Some of us have a convenience store. If it wasn’t for the convenience store we’d have been under a long time ago.

“Last year my fuel sales dropped by about 70,000 gallons. People are buying less fuel. They are only buying it when they need it. The country is not in the best of shape. We keep talking about eight million to ten million tourists, but the money is not trickling down to families. I don’t see the US dollars in my business,” the gas station operator told Tribune Business.

“You can tell me we have eight million tourists, but when I ask the straw vendors that come off the bus how they did, they go and say they didn’t make a sell. I don’t know what they’re talking about.”

Mr Dorsett argued that gas station retailers should enjoy the same percentage mark-ups of 22-23 percent as many price-controlled food products. “We can survive with a a simple solution,” he added. “If you want to control our prices, put them to where the price control margins. We’ll take it from there.” Under a percentage-based margin, earnings would increase/decrease according to whether fuel prices rise or fall.

He added that he had first raised switching from a fixed to a percentage-based margin in 1982-1983 when the late Paul Adderley was the minister responsible, but successive administrations have avoided such a step. Mr Dorsett said the retailers have “no problem” with the motoring public, but warned that the sector’s present financial woes may soon force some stations to close.