Peter Strong: Service stations are mainly small businesses, and blaming them for petrol prices is wrong

There are some 7800 service stations in Australia. Two-thirds of these are owned and/or operated by small business people who sell fuel under branding or franchise arrangements with the major fuel suppliers like Shell, BP, Ampol and others.

Due to attacks by misinformed politicians and consumer advocates, the owners are often viewed as evil capitalists who are becoming wealthy on the back of poor motorists. 

The recent publicity around petrol prices has at times created a witch hunt and is almost hysterical in its nature. The latest criticism from the NRMA about servos charging more than they should as the fuel excise is increased is a case in point. They are wrong. 

The disappointing outcome from this is an increase in abuse of the employees and owners of service stations — the almost 52,000 Australians who go to work every day to ensure that we all have the fuel we need. The abuse of any worker and any business owner in any industry is never acceptable, regardless of how we may feel towards an industry.

It seems the abuse is highest when the price of petrol goes up and decreases as the price goes down. No surprise there, yet the information around petrol prices is fraught with misconceptions, emotions and politics, and it adds to the problem. There is so much folklore and urban myths existing around petrol prices that the Australian Competition and Consumer Commission (ACCC) has a dedicated webpage explaining how it works. There are people who suspect the ACCC of being corrupted by the oil industry as a result.

It doesn’t help that the government of the day — doesn’t matter which party — will always give the impression that it has no control over petrol prices and that the service stations are the problem. As one politician told me: “There will always be political capital from attacking the petroleum industry.”

Service stations are the collateral damage

Today’s problem comes after the current government decided to end the suspension of part of the fuel excise, a tax of 22 cents, that was introduced by the previous government as a cost-of-living measure leading up to the last election. Both governments signalled they would ensure the price decrease or increase was not scammed by the service stations. They didn’t explain how the scam would occur, but they did create a smoke screen to make themselves look ‘holier than thou’ and deflect criticism.

The collateral damage of these statements has been the continued suspicion from some, if not most, motorists and more importantly, increased customer aggression towards service station owners and their staff.

There are also statements made in some of the media, and particularly on social media, by motoring organisations such as the NRMA that are just ludicrous. One recent tweet claimed service stations sometimes make 50 cents a litre profit. This flies in the face of repeated analysis by the ACCC and others — those who independently research the numbers — that shows the annual before tax profit for a service station averages 1.8% over the year. 

The fact is Australia’s average petrol and diesel prices are the sixth lowest of all 33 OECD economies. We should therefore be thankful that we don’t live in the 27 other countries that are higher. 

There was also the time back in late 2018 when an irate consumer started a Facebook campaign to punish service stations by having a day where consumers would boycott petrol stations and not buy petrol. So how would that work? Everybody would buy petrol the day before or the day after; a car or truck or lawn mower needs petrol. The effect on service stations would have been nothing except for a particularly quiet day when they could do a few chores around their forecourts. 

Others have ‘helpfully’ suggested legislation should be introduced in an openly competitive market to cap the difference between the wholesale and retail price. Quite apart from the fact that such an approach fails to recognise that normal retail business costs rise over time (wages, rent, electricity etc), the actual difference in retail and wholesale prices is a lot lower than people believe, as highlighted by the ACCC. 

If the government was to legislate a cap, servos would likely just sell at the maximum cap and we would all pay more.

Petrol stations and petrol are essential to Australian communities. The story behind service stations is a good business story and a good community story. Service stations are essential. They are the last to close and the first to open in natural disasters, with stories of staff manning the forecourts when their own homes are under threat. We should treat servo people with the same respect we treat others, regardless of what is happening to petrol prices.

The price of petrol will continue to go up and down along with the international prices, exchange rates, the normal petrol price discounting cycle, foreign wars and so forth. It is certainly complex.

We are not being ripped off and should be wary of fuel price claims made by politicians, insurance companies and motoring bodies that sit outside the industry.

We must stand up to protect the 52,000 Australians in service stations from unjustified and unacceptable anger and abuse — so that they, the workers, are healthy and safe; while the rest of us have the fuel we need to go about our daily lives.