http://www.cbc.ca/consumer/story/2008/10/29/pe-gas-discounts.html
Summary:
A gas bar in P.E.I called Wilson Fuel has been told by the provincial regulator to stop giving a two-cent-a-litre discount to consumers who pays cash for gasoline. The Regulatory and Appeals Commission complained that Wilson Fuel was charging less than the regulated minimum price for gas. The area manager for Wilsons Fuel saw the offer as being similar to incentives offered at other gas station such as Petro-Canada and Esso. He said that they are offering the money back to consumers because credit card charges two per cent when it is used. This mean they are trying to rebate back what consumers would usually pay to Credit Card Company. In the end, IRAC ordered Wilsons Fuel to stop the cash discounts.
Connection:
The connection between this article and chapter 12 is cash discount. Wilsons Fuel is offering two-cent-a-litre discount which is similar to what I learned in chapter 12, which are 2/30,n/30 and 1/15,n/60. Just like Wilsons Fuel discount, 2/10,n/30 and 1/15,n/60 gives there customers discounts if they meet a certain requirement. Wilson Fuel only gives discount if its customer pays cash and 2/10,n/30 and 1/15,n/60 that only gives customer discount if they pay early. The difference between then is the transaction differs.
Reflection:
I do not think the IRAC should stop Wilsons Fuel to stop giving discount to the consumer because it should be their choice to stop or not to stop the discount. Even if they are charging below minimum gas price, it is their decision to earn or lose money. All they are doing is helping consumer get back the money from all the time they had paid the extra money when using credit cards. The way Wilsons Fuel is giving discount is similar to what Petro and Esso are doing, so I think it is unfair that they are not allowed to do this.
2 comments:
Actually, I think that the IRAC was right in stopping Wilson Fuel from giving cash discounts. If they were to simply allow for them to give the discounts, then other gas companies will follow in their footsteps, resulting in many companies breaching the provincial gas regulation. I think that Petro Canada and Esso are allowed to give discounts because they make up for it by selling a lot of gas, but earning little profit. Not only would the gas company lose money, but the government would lose money too because about 32% of gas sold goes to the government. Even if the company loses money, they only lose a little because they profit only 3% of the gas sold. This link shows how the gas pricing works in Canada:
http://petro-canada.typepad.com/photos/uncategorized/2008/05/06/taxpiechartengsmaller_2.jpg.
If smaller gas companies like Wilson Fuel were allowed to give discounts, then Petro or Esso would probably give more discounts to lure customers, which would result in the government losing money.
I also disagree that Wilson Fuel should be selling their gas at a discount. If Wilson Fuel had continued selling gas at a lower price, other gas stations might also have had to lower their prices to earn enough profit. If the other gas station started lowering the price, there would be a great lose in profit and everyone in P.E.I might be driving and using gas more because the cheap price of gas. Using more gas would be bad for the environment because it causes pollution. I think you raise a good point that Wilson Fuel should have the right to give discounts, but I think they would have never won that case.
Post a Comment