Gasolene price going up - again $400 a gallon By Michelle Elphage Guyana Chronicle March 1, 2000 THE price of gasolene is going up again - the second time this year, dealers announced yesterday. According to the Petrol Station Dealers Association (PSDA) gasolene will jump by $30 a gallon to about $400 from Friday. Dealers are upset at the trend claiming they bear the brunt of the public reaction to price increases but are at the mercy of the big oil companies. At a press conference in the Georgetown Cricket Club, association President, Mr Steve Chung said dealers were "fighting for a fair deal (and) a level playing field" and appealed again to the government to intervene. Mr Charles Woon-A-Tai, an executive member of the PSDA told reporters: "We have been fighting to give customers a fair deal but it is not reciprocated from the oil companies to the dealers." Woon-A-Tai, the dealer for the Shell Vlissengen Road station in the city, echoed Chung's calls for government intervention, noting that dealers only manage to gross 4.5 per cent in profits out of which they have to pay overheads amounting to nearly $1M monthly for the average big station. "(We are) calling on the Government to have at this time, an interventionist policy in terms of setting the wholesale prices for fuel. "It is now out of control," Mr Manzoor Nadir, another executive member, said. "Our oil companies will look at their bottom line and they will put on the necessary increases where they feel it is easier to absorb and that might not necessarily be the fairest way to do it", he argued. Nadir felt "it is unfair now for the oil companies once again to be doing what they feel is right in their opinion and the people who have to face the pressure every day from (the consumers are) the dealers at the pump." Added to this, certain companies have started to discriminate against some of the more vocal dealers in the PSDA, he claimed. He said Texaco late last year cut its credit limit to dealers from 21 to seven days, effective at the start of this year. Nadir told reporters too that a Texaco dealer, Mr Balwant Singh of Golden Fleece, West Coast Berbice, had his contract to transport fuel for the company suspended shortly after the association became vocal in fighting its case against the companies. Singh is now down to being allowed to transport fuel only for his service station, he reported. The PSDA recently met Minister of Trade, Mr Geoffrey Da Silva and Chairman of the Guyana Oil Company (GUYOIL), Mr Edgar Heyligar on the issue. Chung said the meetings with the minister centred on the low profit margin dealers are working with, smuggling of fuel, unfair contracts, indiscriminate use of fuel duty free concessions and legislation to protect consumers. Draft legislation on the Petroleum Act has been circulated and the ministry along with the dealers, companies and other related agencies, are working on the Fair Competition Act, he said. The meeting with Heyligar dealt with the wholesale prices GUYOIL sells at which dealers complain are the market setter and are uneconomical to them. "We have been talking to the Government not to do this because remember we are operating on a free market system...but they (GUYOIL) are technically controlling prices," Chung contended. The PSDA head said that as a result, GUYOIL has dropped its wholesale price by $4 so its dealers are now enjoying that amount on profits. Meanwhile, Shell, after a meeting with its dealers has agreed to have them set the price at pump and the company will make the necessary adjustments. The association has also called on the government to consider lowering the consumption tax on fuel which dealers complain cuts deeply into their profits. "It is now crucial that the government cut the consumption tax which has been providing windfall revenue for them," Nadir contended. He explained that with gasolene going up to $400 a gallon, out of this $115 will go to consumption tax and 60 per cent to the company. However, he emphasised that there must be a regulation on the prices set by the oil companies since they can benefit without actually filtering these down to the consumer. "Gasolene prices, for it not to wreak havoc...(have) to be kept at no more than $300 per gallon. The economy cannot handle $400 (per gallon)," Nadir argued. He said dealers might be forced to eventually smuggle if the companies keep raising fuel prices since "there is tremendous incentive to deal with contraband fuel and lubricants." Diesel prices were also hiked about a month ago, the first time gas prices were increased this year. "Diesel has jumped even higher than gasolene, where today diesel is...more expensive than gasolene on the retail market", Nadir said. He explained that with the last price increase, diesel went up by about $60 and what the oil companies did was to spread that price rise among gasolene, diesel and kerosene. "So while diesel went up by about $60, the companies only put about $35 increase on the diesel itself and they put an extra $10 on the gasolene. "So every gasolene user is now subsidising diesel", he said. When the gas price rise was announced last month, dealers said they had hoped that it could have settled at $360-$370 per gallon.