Turkish gas stations should adjust to low profit margins and consumers to higher prices, said an industry expert on Monday.
The profit margin of gas stations became a dispute between the private sector and Turkey's state regulatory authority when the authority informed gas stations early November to decrease the pump prices of gasoline in line with regulations. The sector players responded at a meeting on Nov. 29 saying that low profit margins could result in the shutting down of gas stations.
Gas stations in the U.S. receive little profit from pump sales because of the high level of competition, said Ayhan Erdem, a fuel oil industry expert from the Caspian Strategy Institute based in Istanbul.
'U.S. gas stations make their profits from the sales through byproducts and in their shops.' Erdem said, adding that Turkish gas stations should also switch to this system to recover their profits.
Erdem said that taxes had not increased since 2012 in Turkey, and he adding that the claim that high tax prices decreases profits does not reflect the truth.
'Recent discounts in fuel oil prices show the high percentage of tax in the price of a liter of fuel oil. But the amount of tax in the price of a liter of fuel oil also decreased,' Erdem said.
He also added that TUPRAS, the country's biggest refiner, is no longer the single entity to determine oil pricing because since 2005 with tax-free imports, the company has to compete with nearly 70 rivals.
Erdem also advised sector players to discuss a new pricing methodology for the future as the current system whereby oil pricing rates correlates with fuel pricing will no longer be possible.
On Nov. 29, Muhsin Alkan, president of the Employer's Union of Petroleum Products, cautioned retailers against shutting down gas stations to prevent falling profit rates in reaction to the regulatory authority's warnings to fuel retailers on dropping pump prices.
By Arif Hudaverdi Yaman
Anadolu Agency