In a dramatic shift, Tanwar Petroleum in Lewisham, Sydney, has transitioned from being one of the city’s most affordable service stations to one of the most expensive, as the global fuel crisis intensifies. Premium unleaded and diesel prices are nearing $3 per litre, pushing the station to operate at thin or even negative margins.
Gunveet Kaur, an employee at the station, lamented the drastic change. “We were the cheapest in Sydney. Our business was very busy before, like cars queuing up to the driveway,” she said. Daily sales have plummeted from 20,000 litres to a mere 2,000 litres, forcing the station to operate at a loss.
The pricing model that once allowed independent stations to undercut competitors now leaves them vulnerable to the global impacts of conflict, threatening their survival and the consistent supply of fuel to consumers.
Sydney’s Fuel Price Dilemma
Questions have arisen on platforms like Reddit, asking if Tanwar Petroleum is selling “Sydney’s most expensive fuel.” However, a price list dated March 14, shared with the ABC, paints a different picture. The station’s owners report purchasing E10 for $2.68 per litre but selling it at $2.45, resulting in a $0.23 loss per litre. Diesel was bought for $3.28 per litre and sold for $2.99, a $0.29 loss per litre. Despite these losses, three other fuel types were sold at a profit, with 95 Unleaded yielding the highest margin of $0.14041 per litre.
“We want to keep our business going, that’s why we have to sell at this price,” Ms. Kaur explained, highlighting the difficult balance between maintaining operations and managing costs.
Impact on Local Drivers
The rising fuel prices are testing the patience of customers like Frank Tmouti, a taxi driver who fills up regularly. “Everyone worries at the moment because we don’t know whether this war is going to escalate or just going to stop,” he said, noting his weekly fuel bill has increased by $250. “Maybe another couple of months we can sustain. After that, there’s not much profit to make a living.”
Emma, another local resident, has opted for a hybrid vehicle to combat the high fuel costs. “Honestly, that $500, $600 a month is a lot of money. That’s what I was paying with my old car,” she shared. This sentiment is echoed by Transport for New South Wales, which has observed a rise in public transport usage, with an average of 47,000 more trips per day in the four weeks leading up to March 15.
The Broader Economic Context
The Australasian Convenience and Petroleum Marketers Association (ACAPMA) acknowledges that Tanwar Petroleum’s predicament is not unique. The station operates without a fixed fuel contract, purchasing at the market or ‘spot price,’ which allows for quick responses to demand but leaves them exposed to market volatility.
“They can shop around and get fuel a little bit cheaper and respond to demand quite quickly,” ACAPMA chief executive Rowen Lee said. “But the [service stations] on spot price are probably coming in second order priority, unfortunately, and sometimes … supplies that are coming a bit short at times for them.”
Family-owned stations like Tanwar Petroleum are known for their competitive pricing. “Independents are consistently the cheapest service stations in Australia,” Peter Khoury of the National Roads and Motorists’ Association stated. “They are the most competitive, they are most likely to put the most downward pressure on prices.”
Looking Ahead
As the crisis continues, the future for independent service stations remains uncertain. According to Khoury, the resolution lies in two potential solutions: the end of the ongoing conflict involving Iran, Israel, and the US, or the reopening of the Strait of Hormuz, a critical channel for about a fifth of the world’s oil supply.
The situation at Tanwar Petroleum serves as a microcosm of the broader challenges faced by independent fuel retailers in Australia and beyond. As global tensions persist, the ability of these businesses to adapt and survive will be tested, with significant implications for local economies and consumers alike.
