12/03/2026
Another message from our Chief Operating Officer:
There is a common question coming up asking why we can't hold the price down around what we previously purchased the fuel for. Like any business, being able to buy new stock is a cash flow problem that is a function of how well you sell the old stock and what the new stock costs. When the TGP is escalating at a rapid rate, it will outrun the cumulative revenue of the old stock, including margin, to the point where it is uneconomical or simply not possible to buy at the new price. For some smaller independents this has been a real problem over the past week. Some independents have been caught short on cash flow and it has flowed through to their ability to fill their tanks. That may explain why some sites in the region have been running out in addition to the allocation and demand issues I explained in the last post.
To put the demand side in context, some of our own sites have been turning over their stock in less than a day or two. There is simply no cheap stock left even if the issues with the runaway price and replacement cost weren't a factor.
The graph shows an example where we fill a tank to 120,000 litres moving through 14,000 litres per day. The TGP is Sydney Diesel from last week to now, with 6 cents per litre freight to site and 12 cents per litre margin to cover the running costs of a retail site included in revenue. This is an example and actual margin requirements vary widely.
If we sell at the old buy price plus margin (light blue line), the cost to refill the tank (red line) overtakes cumulative revenue by Day 3 and the gap keeps widening. By Day 9 we've collected around $232,000 but it costs nearly $282,000 to replace the stock. That is a $50,000 hole before we even think about turning on the lights.
The darker blue line shows what happens if we move the price with the replacement cost each day. In this example we nearly break even by Day 9, but only because we moved the price every single day to match what new stock was actually costing. That is what a responsibly run independent site has to do right now.
Prices always move more slowly on the way down. We have committed to continuing to support our communities by managing our stock position wisely to ensure that cheaper prices flow through as soon as they are able to.
Thank you,
Nathan
COO
