Gas Gougers

The recent decision by Total that it will not respect the guidelines for setting the price of its gasoline and will be adjusting its price by more than the stated increase is most unfortunate.  If gas goes up by $1.00, then they will increase their price by say $1.50.  The obvious question is what will happen when gas prices fall?  I am sure that in that case they will either drop it by the amount of the fall or, using their thinking process, by less than the drop.

The company is arguing that costs have increased and that they are unable to meet these costs with the current margins.  Obviously, electricity costs have risen significantly with the increase in oil prices but if the prices drop will the company review its margins downwards?  The only way to accurately assess whether the company is correct is to examine its financial statements but that is unlikely to be published.  The other disturbing point is that the Government has remained tight lipped on the matter.

I believe that the real problem is the one that we encounter with all multi nationals.  They assess their Jamaican investment by comparing it with their operations in Europe and the United States.  Thus the gas stations in Jamaica should generate the revenue that American or European gas stations generate.  There are two main problems with this argument.  The first is that these countries are much larger which means that the average consumer will drive farther than the average Jamaican driver.  In addition, persons in these countries generally drive more often than us as this is the way that they are cultured.  This results in a higher expectation of sales than one would otherwise expect in Jamaica.

The second problem is that there are too many gas stations in Jamaica especially in Kingston.  This results in the stations having too few customers to sustain their business.  Even Lower prices do not attract more customers because people are loyal to “their” gas station.  It is inevitable that some service stations will have to close in order for the industry as a whole to survive.  As the price of gas increases more persons will drive less and the sales of gasoline will continue to fall putting more pressure on the stations.

We have all seen what happens when a group of companies believes that it can do whatever it wants in Jamaica because we have no choice but to use them.  The banks have given us a clear demonstration of this principle with increased service costs with poor customer service.  Total is no different as I have experienced many times inferior service and frustration at their outlets.

They might think that we have no choice but to accept their conditions but as for me I will be buying my gas elsewhere.

Tags: Carl Wilson