Fuel Price Discounts Will Close Service Stations

PRESS RELEASE FROM: Motor Trade Association (MTA)

FUEL PRICE DISCOUNTS WILL CLOSE SERVICE STATIONS

While motorists are enjoying drastic cuts to the price of fuel this Easter weekend, the Motor Trade Association (MTA) is warning of the long term costs to both industry and consumers.

MTA National President (and Service Station proprietor) Denis Sullivan says that while cuts of up to 10 cents a litre are great news for motorists, the severity of the cuts as the major brands fiercely pursue market share, will inevitably come at a high cost to the New Zealand motorist.

"We have a situation where about half the independent service stations are losing money on their operations due to literally no margin to run their businesses on. Many of our retailers are in fact losing money to stay in the market. Independent service stations pump only 28% of our nations fuel, and we are at the point where if the unprofitable operators disappear, that proportion will slump to around 10%, leaving the market controlled by an oligopoly of the major oil companies. Some 700 independent sites nationally represent approximately 45% of the retail service station industry.”

“The oil companies currently sell 72% of the fuel volume...savage price competition like these Easter promotions could see more independents closing and consumers faced with retailing of fuel dominated by all of the industry suppliers and prices will inevitably rise. This is a result of a market share war within the wholesale industry. It is not sustainable.”

“Jobs have already gone – closures will follow.”

“The price of fuel has a major effect on the economy and the day to day lives of almost every New Zealander, we think that some Government intervention into the implications of such major competition in the petrol price area is needed urgently”, Mr Sullivan says.

ENDS

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