The petrol forecourts business owned by the billionaire Issa brothers has been accused of profiteering after gross fuel profits rose by 20 per cent to $1.7 billion.
Gross profit is revenues minus cost of sales. That second is the ost of the goods sold, what the business had to pay someone else for the things that were then sold.
Howard Cox, founder of the campaign group Fair Fuel UK, said: “The EG Group’s commercial mantra is ‘serving the needs of busy consumers’, yet their exploitation of drivers at the pumps in the last 12 months is nothing short of immoral.
Out of gross profit you’ve then got to pay the energy bills, wages, interest, taxes and whatever the hell else is a cost of doing business before you get to net profit.
Someone’s gross profit going up is a very, very, weak sign of anything at all, let alone rooking the customer.
No complaints about how much extra revenue HM Gov is pulling in from the increased tax take due to the higher prices of fuel and energy? Or is that not classed as ‘profiteering’?
Damn those regulations forcing consumers to buy their fuel from the Issa’s forecourts.
The narrative is that those icky people in the private sector are perceived to have a substantial amount of money; therefore, any sort of hatred directed at them is virtuous and greed on the part of the state to obtain that money for its own purposes is to be encouraged.
We see the same thing where state “rent control” policies have had the wholly predictable result of constricting the rental market, with the media blaming the property owners renting out their properties.
Why on earth are all these people in the public sector striking?
Their wages have gone up every year, so why on earth are they being so greedy?
I admire Howard Cox for still earning what he did in 2011.
Oh, wait…
I’d be interested to know what side of the cost of goods line the various extortionate taxes on fuel fall. They _ought_ to be above the line and therefore not impact the GM number, but I’d be at the very least reluctant to assume that…
What’s the actual margin that the Issa brothers actually make on fuel after the governments had its huge wedge of tax, duty and VAT?
I’ll bet it’s pennies. In fact I’m pretty sure the big earner is selling stuff in the petrol station shop, not the fuel itself.
In my experience you can rely on Euro Garages to be the most expensive in a given area so I have some sympathy for the complaint. Not sure about the profit from the shops: they don’t sell alcohol (nothing to do with Islam, of course, just road safety) and don’t seem to be as much a mini-mart as some others.
@john galt
that’s exactly my point – if the GM is before fuel duty (and the VAT on the fuel duty – though VAT definitely ought not to be in either side of the calc…) then it’s wildly misleading.
The big earner overall probably is the fuel – just like a grocery store can make enormous amounts from a margin of 1%. It’s all about turnover, and fuel almost certainly has by far the fastest turnover in a gas station of everything sold.
M,
“Damn those regulations forcing consumers to buy their fuel from the Issa’s forecourts.”
The main thing with garages rather than supermarkets is convenience and speed. I once even worked it out on my way home on a Friday from work, that at my hourly rate, it was cheaper to go to Esso than sit in a queue for fuel at Sainsbury’s.
But it’s also the thing of how you can fill up and quickly grab a Ginsters or a Costa in one hit. You aren’t filling up, and then finding a cafe. Even though you pay a premium for both, the time saving is worth it.
I mean, if you’re that keen about fuel prices there’s an app or two that finds the cheapest places. Although I do find it weird how much people will inconvenience themselves for 1p/litre, or about 40p.
I think Fuel Duty becomes due the moment the stuff leaves the tanks and hits the roads on the way to the retailer. VAT is charged by the retailer once you stick the hose in the hole. With the wrinkle about who charges what and when and nets it off later.
With booze, you can decide when the duty is paid, between brewed and in inventory, or when sold. I think you can change your mind about it as well, unlike VAT on commercial property.
Do they hold much inventory / have futures contracts for supply? Does the revaluation of same happen above or below the line?
On all the public balance sheets I’ve looked up don’t they include footnotes saying they can basically under-report derivatives profits?