Oil Companies Leave Small Towns Running on Empty

Rural petrol stations are falling by the wayside all over the country, but DAN HUTCHINSON finds the battle is not over between small independent retailers and the big oil companies.

Gary Robb provides much more than just petrol to the small town of Oaro, but the loss of supply from the big oil companies is now jeopardising what people in the town have come to expect.

More than a million people pass through this village on State Highway 1 at the southern end of the Kaikoura coast each year, but chances are only a small number remember it as more than the last service station before the Hundalee Hills.

The town — a scattering of baches and houses, a camping ground and a boat ramp — gets its share of holidaymakers each year, and Robb provides them with most of the essentials and, until recently, petrol at his Ocean View shop, bar and restaurant.

While the beer tanker can make the trip to Oaro without too much trouble, petrol has been an increasingly difficult and expensive prospect.

With negotiations breaking down two weeks ago, Shell has removed its tanks, leaving yet another small town without fuel.

Robb says he was initially told by Shell that the tanks would be removed because it was uneconomic to supply him and that the tanks were an environmental risk.

He disputes that, saying he has never had leakage from his tanks, and he is on State Highway 1, which the tankers use to supply the northern towns of Kaikoura, Blenheim and Picton.

He was allowed a reprieve while he organised another supplier, making a choice between Allied and FarmDirect. He chose Allied because it would pay for part of the cost of installing new tanks.

However, he was advised several weeks ago that this would not be happening. His tanks have now been removed, and he has also lost valuable bulk-buying power through the company.

Robb says he may have to fork out an estimated $120,000 to install new tanks and buy his fuel independently, and try to strike up a new arrangement with FarmDirect.

“Everyone wants to supply you but nobody wants to commit to the tanks,” he says.

Robb says there is no money in selling petrol, but without it he would lose sales on other convenience items and the restaurant trade. He says there is also a public service element to his petrol station, with boaties and motorists having to go an extra 20km to Kaikoura to fill up.

Many campervans and tourists stop in Oaro because they have underestimated how much fuel they will require to get to Kaikoura from Christchurch via Hanmer Springs.

Motor Trade Association communications manager Andy Cuming says the Oaro situation is typical of what is happening in rural areas across New Zealand, with 64 stations closing since the start of the year, the total falling from 1477 stations to 1413.

“Most of the petrol stations closing down have been independents, littered around the countryside at lovely places like Oaro, where people like to go at certain times of the year,” he says.

Independent operators come under a lot of pressure from oil companies, with a trend towards concentrating stations in more profitable city locations, he says.

“If you are not pushing the volumes, they will find a rationale to run you out of business,” he says. “It is commercial bullying in many places and you can’t do these sorts of things.”

He says the loss of service stations is threatening the way of life for many small communities and is an erosion of service to motorists.

Tougher legislation in countries such as Australia and the United States prevents oil companies from exploiting fixed-term contracts and environmental requirements to close independent operators, he says.

Kaikoura Labour candidate Brendon Burns is using the closing of rural petrol station and high fuel prices in places like Kaikoura as election planks. He says he will seek a parliamentary inquiry into how oil companies price and supply fuel in rural areas.

“What’s happened at Oaro is part of a deliberate strategy to reduce the number of service stations. Oil companies are basically forcing private operators out of business so they can concentrate on fewer and fewer sites, which maximises their profits,” Burns says.

“Blenheim petrol stations are either delivered from Christchurch, which means tankers drive through higher-priced Kaikoura to deliver cheaper petrol in Marlborough, or they deliver from Nelson, which is only a little closer than Kaikoura is to Christchurch.”

Burns says other petrol stations in the Kaikoura electorate face similar threats, and Waikari is next in line to lose its station.

Oil companies bumped up their petrol prices again this week, while at the same time the three biggest oil companies — Shell, BP and Mobil — were reported to have increased their profits by at least 66 per cent last year to a combined $600 million.

“These multinationals don’t give a damn about what the loss of a service station means to a small community. Oaro people now have to drive to Kaikoura to fuel up, and then pay more for the privilege,” Burns says.

Shell New Zealand corporate communications manager Jackie Maitland says it is no longer economically viable for the company to supply the Oaro outlet. She says the company is constantly reviewing the sustainability of it operations.

“To go on serving a multitude of uneconomic outlets indefinitely is not in the best interests of anyone, including the people who invest their money with Shell,” Maitland says.

“Shell has signalled for a few years now that we are being forced to cease supply of some sites as a result of changing dynamics in the industry.

“The number of sites we had around New Zealand was a direct result of the days of regulation (ending in 1988), where companies made a guaranteed margin on each litre sold. Those days are long gone.”

She says the tanks at Robb’s service station were 26 and 27 years old and the company is mindful of the Resource Management Act and other environmental protection laws.

“We believe that tank removal is the only way to ensure we meet society’s expectations of us in terms of ensuring we leave sites in a healthy state,” she says.

Oil companies cannot control the price of fuel at independent service stations, as that is up to the individual retailer, Maitland says.

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