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Should We Close Regional Service Stations To Reduce Differential?

Senior Economist from Shell states his case on the Gippsland Portal

By Emma Kae - 26th August 2002 - Back to News

One subject that has remained in the headlines as primary concern for many Gippslanders has been differences in the prices of petrol throughout the region. Our discussion forum on the topic has created a lot of interest, not least from the Senior Economist of Shell Australia.

The response from Peter Harris came from one of our regular contributors (name and address withheld) who informed him of the communities concerns as raised in the forum.

Mr. Harris had several interesting things to say about the fuel situation in Gippsland: "On the reason why prices in Gippsland are more expensive than closer to Melbourne, it is because most regional service stations sell very little petrol compared to their larger city counterparts.

The only way to reduce this differential is to close down large numbers of regional service stations so average sales at the remaining sites increase. As Shell does not own the large majority of country sites… it is difficult for us to drive this process… This type of industry restructuring does not come without its costs, as… we would see many family owned businesses disappear."

How do you feel about this issue? Which is more important, the continuation of a local business or the pursuit of prospering competition? Respond to this question and other hot topics in the discussion forum.

Click here to read Mr. Harris’ complete message.

Hot Topics For Discussion...

Why is it that there are price differences? Surely if an entrepreneur makes the decision to open a petrol station in a country area, he or she would take into account the small turnover that a sparsely populated area would ensue. Is there an excuse for hiking up costs to match what the equivalent business in Melbourne is making?

The arguments that have been made by representatives of the fuel stations thus far are conflicting, with one party stating that more stations are necessary for the development of competition and another arguing that too many stations will not allow enough turnover to enable them to bring prices down. Is it possible that the prices are being kept artificially high because most of the petrol stations are owned by the same person or group, or only a few groups? If so, why aren't the independent stations offering lower prices?

Taking into account the transportation of fuel, and the decrease in volume sold between regional and suburban areas, what price difference do you feel is fair between Melbourne and Gippsland?

Several other questions remain unanswered:

· Is it fair to have large differences in prices between Gippsland towns?

· Why are the influential bodies, such as the independent stations and local Government not doing anything on this issue? What could they do to improve the situation?

· Are there too many stations in the region to have sufficient volume consumption to bring the prices down?

· Do you think that having fewer stations would have a beneficial impact on fuel prices?

We would appreciate your view on these questions. Please do not hesitate to have your say in the discussion forum, or by e-mailing us you comments using the form below.

Source: http://gippsland.com/

Published by: news@gippsland.com

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