“GOOD RESULTS”

Dominion, Volume 29, Issue 149, 19 March 1936, Page 8

“GOOD RESULTS”

Fixation of Petrol Prices TRADE ENTHUSIASTIC Other Centres Asking For Stabilisation Though they have not yet had time to feel the full effects of the recent fixation of wholesale and retail petrol prices, resellers in the Wellington city aud suburban area who were approached yesterday were enthusiastic about the results of the action of the .Minister of Industries and Commerce, Hon. D. G. Sullivan. The opinion of one man. that the effects had been exactly what resellers had hoped it would be, was supported by a large number of suppliers and resellers. So successful had the fixation of prices been, said a representative member of the Petrol Resellers’ Association, that other centres were now trying to have the fixation extended to their areas. It had already been announced that Christchurch wanted stabilisation of prices; Wanganui and Palmerston North were also making efforts to have the same action applied to them. Auckland, however, did not seem to want fixation. It had not been affected by price-cutting. None of the resellers was perturbed about the higher wage rates. The benefits of the stabilisation, said one,outweighed the extra expenditure in wages. Before fixation it was quite possible for a firm to lose more money each month through the price-cutting of competitors titan it was now spending on the increase in wages. It was possible that some linns had noticed a reduction iu profits for the month the fixation of prices bad been in force, but over a longer period nothing but satisfaction could be felt. The elimination of price-cutting was the main advantage of fixation and over a long period the extra expenditure in wages must be balanced, or more than balanced, by the steady income from sales. Before, there had been “ups and downs” through spasmodic price-cut-ting ; these had gone. Rebates to Big Customers. One reseller said he was losing' money through big petrol-consuming road services buying their petrol outside the fixation area. These firms, he said, had once been able to get their petrol from him and other resellers at a discount. Now that they could not do so, they were getting their petrol at the other end of their runs, at stations in towns where the price fixation did not .apply. This view, however, was ridiculed by the manager of one of the largest reselling firms in Wellington. He said that there had been an arrangement in the trade by which rebates were allowed on accounts of 409 gallons or more a . month. If firms consuming this much each month had not ffieen able to, get .petrol, from the resellers, at Ad. a gallon over the price at which it was siipplieij to. the, resellers, they, had gone to the oil companies and had bought their petrol direct. The big consuming firms could still do this. There was no need for them to go outside the fixation area. Of course resellers were not able to supply the firms at the old rebate. But he'doubted if this meant a loss to them. By the time they had made allowance for wages and the time involved iu supplying the firms, the resellers did not obtain any profit at all out of the id. a gallon.

"A reseller might think he is losing through such firms going elsewhere for their petrol,” said this man, “but actually he is making on it.’’ Support for this opinion was given by another prominent reseller, who said that some of the big petrol-con-suming firms had been wanting petrol from the resellers at a price that did not show any profit to the reseller. The transfer of this business to oil companies or to other centres would not mean any loss in real income to the resellers. Stabilisation Important. "It is the stabilisation of the market which is the main advantage of fixation of prices,” said another reseller. "Before, if somebody was in danger of losing his business, he would drop the price of petrol Id. or even 2d. a gallon. It can readily be realised that if a firm was selling 1500 gallons a month the difference iu income through having to drop its prices to meet the new competition was substantial. It could be so much that the money lost would have helped to pay, if it would not have covered, the increase in wages that lias been introduced.” The fixation of prices and the stabilisation of the market were still in their experimental stages, said another reseller. The scheme was working very well, and it was hoped it would work even better when the full effects were felt. There were many aspects still to be worked out, such as the licensing of pumps, but once these were put into force resellers would never want to return to the old methods and the old lack of system. A ’ suburban reseller said lie had already noticed an increase iu his takings. Before the fixation he had lost possible customers because they had gone into the city to purchase their petrol from a price-cutter. Now it made no difference where they bought their petrol and lie was benefiting, lie iiad lieen told by other station-owners that they bad noticed the same effect.