Siseko Njobeni
19 November 2008
Johannesburg — FUEL retailers are banking on further fuel price decreases to revive falling sales, the Fuel Retailers' Association says.
In the volume-driven petrol-eum industry, a sustained fall in sales volumes signals disaster for some retailers. The successive fuel price increases earlier this year put several retailers under severe financial strain as volumes took a knock.
The retailers could get a reprieve if the trend of fuel price decreases continues. The minerals and e nergy department is widely expected to announce another fall in fuel prices next month, thanks to the falling international crude oil price.
In the period between the end of last month and Thursday last week, petrol over-recovered by more than 138,39c/l; 0,05% diesel over-recovered by more than 59,83c/l, 0,005% diesel by 58,46c/l and paraffin by 56,54c/l.
"As (fuel) prices come down, we expect sales volumes to increase," association CEO Peter Morgan said this week. "We are hoping that in the fourth quarter, sales will improve because of the positive impact of the recent fuel price decreases."
South African motorists have benefited from back-to-back fuel price decreases since September.
This came amid evidence that sales volumes of the main petroleum products -- petrol, diesel, paraffin and liquefied petroleum gas -- had come under pressure from the increases earlier this year.
"The slight decline in petroleum sales volumes in the third quarter of this year came as no surprise in view of the fuel price increases seen earlier this year," Morgan said.
South African Petroleum Industry Association figures released last week showed a 6,9% decrease in the aggregate sales of major petroleum products in the third quarter, compared to the same period last year. Paraffin sales had the biggest decrease at 36,3%, followed by liquefied petroleum gas at 12,2%, 0,05% diesel at 10,1% and 0,005% diesel at 3,4%.
Morgan said the fuel price increases had led to changes in sales trends.
"The motorists' population is made up of two broad groups. There are those who do not feel the impact of price increases. These are the wealthy people who drive big cars and always fill up their tanks. Then the second group is made up of those who budget every week how much they are going to pay for fuel, " he said.
"As times become more tough, we see more people moving from the first group into the second group. More people are making regular trips to the garages but there is no increase in the amount spent," he said.
Meanwhile, the a ssociation has commenced the search for a new CEO as Morgan has stated his intention to leave. He has been at the organisation's helm for six years.
The body has advertised for the post of a "trainee CEO", who would take over the reins after a mentoring process under Morgan. "There is a need for a fresh blood. I am worried that I have been in this organisation for too long," Morgan said yesterday.
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