N.B. gas retailers argue for higher margins
Posted: Apr 5, 2011 9:46 AM AT
Last Updated: Apr 5, 2011 9:46 AM AT
New Brunswick gasoline retailers told the province's Energy and Utilities Board that unless they are allowed to charge consumers more, they'll be driven out of business by low profit margins.
At a hearing on Monday, petroleum retailers filled every available seat and argued for a higher regulated margin.
Alex Scholten, past chair of the Atlantic Convenience Stores Association and president of the Canadian Convenience Stores Association, said retailers have been allowed to add five cents to a litre of gas for the five years since gas regulation was introduced.
"I'm upset on behalf of the retailers in New Brunswick who have to live with a very low margin to cover all of their operating costs," said Scholten. "We need to increase our margins, no question."
Scholten said credit card fees are costing retailers two per cent of every sale, and minimum wage has also gone up.
Despite that argument, many retailers aren't charging the five cent margin they're allowed. For example, at the Scholten's outlet in Grand Bay on Monday, the price being charged for a litre of gas was a full cent below what is allowed by law.
Furnace oil retailer Jim Gould said his business is being strangled by the failure of government to increase margins.
"The price of my power bill goes up, the price of my phone bill goes up, the price of anything I touch increases, but my margin is fixed," he said.
At the hearing, an expert hired by the Energy and Utilities Board recommended gasoline retailers be allowed a modest increase of nearly a penny, but public intervenor Yassin Choukri said that is too much.
"Some of the calculations, some of the considerations are simply not based on reliable data," Choukri said.
However Scholten argued less than a penny isn't enough for retailers who deserve to earn a "living wage".
"The price will have to go up to cover this - absolutely," Scholten said. "But the fact remains that if we don't get a price increase consumers won't be able to buy gasoline anyway. Our sites are going to be closing."
According to figures provided by the retailers, in the past five years nearly 90 gas stations in New Brunswick have closed. Closures before regulation were twice that.
The hearing is expected to continue on Tuesday.
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