Fuel costs escalate

29th of June 2012
Fuel costs escalate

German correspondent Thomas Schulte-Marxloh reports on how rising fuel costs are affecting cleaning businesses.

The German public is currently talking about the constantly increasing price of fuel and the ways of cutting respective costs. These costs do not only affect the man in the street but also the economy in general. All businesses in which mobility is a prerequisite have to find ways of avoiding an increase of their own prices in order to remain competitive.

This is true for highly export-orientated companies like producers of cleaning machinery or chemicals as well as for locally operating companies, for example companies in the contract cleaning business for which logistics expenses can be a costly factor.

German news magazine Der Spiegel recently reported a general price increase for petrol from about 1.34 euros to 1.61 euros per litre in the last 18 months. Apart from that, the German public has to face unpredictable ups and downs in petrol prices every day. Service stations are connected by computer to the oil companies - which determine the prices of each individual petrol station, some days up to five times. This means that prices vary from town to town and from hour to hour.

A refill is, in general, more expensive in the morning or evening – up to 14 cents per litre – or before holidays and at weekends. Despite the solemn assertions of the oil companies that petrol prices are only based on the real prices on international oil markets, not only the public is sceptical. Sometimes even the Anti-Monopoly Office wonders if there are certain agreements by the multinational oil companies. However, according to official investigations no evidence for a price monopoly by the oil companies has been found yet.

Oil companies never become tired of repeating that in fact more than 56 per cent of the gasoline price is tax - consumers not only pay a petroleum tax (65.45 cents per litre) but also, on top of petroleum tax, the regular VAT of 19 per cent. Germans seem to pay the highest petrol prices in Europe.
Politicians, when not in office, frequently demand strict laws to control the power of the mighty multinational oil companies or to adjust existing regulations. Presently, for instance, some politicians are asking for an adjustment of the tax relief for commuters. However even politicians from the opposition will hardly ever demand a reduction in petroleum taxes.

Politicians, when in office, develop their talent in inventing new taxes on petrol, like the so-called ‘ecological tax reform’. The increase of 15 cents per litre in 1999 was justified as a political measure to save the environment; instead the extra money was used to save on National Insurance.

Luckily modern automotive technology has significantly reduced petrol consumption - and apart from battery powered cars, more and more people drive with LPG (liquid petroleum gas). LPG is about 50 per cent less expensive than petrol. The cost of carrying out the relevant modifications of existing cars usually pay off within a year. Unfortunately, though, very few petrol stations offer LPG as well.

Present fuel prices certainly present a challenge to the contract cleaning business where mobility is as vital as competitiveness – and flexible thinking.

•Read the ECJ special focus on the German cleaning sector


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