New fuel price formula will ruin independents and channel huge profits to the Big Boys. By Ciaran Ryan
Hundreds of petrol station owners across the country are threatened with closure over the next 12 months because of a new fuel price formula that allows oil companies to take a larger bite out of the retailers’ margins.
This is the converse of what the new pricing model is meant to achieve and it almost certainly violates the Petroleum Amendments Act of 2003, which is designed to promote small and emerging businesses and prevent vertical integration. It is supposed to stop oil companies from owning the entire fuel chain from refineries to fuel depots and service stations. In practical terms, it does nothing of the sort.
The act prevents oil companies from holding retail licences, but this does not stop them owning the service station assets. The licensed retailer is then, in effect, just a glorified manager. It’s a neat way around the prohibition on vertical integration and allows the oil majors to feast on the margins of their service station operators.