Is big retail to blame for last week's fuel tanker tragedy?

After a crash, a safety audit has effectively grounded a large portion of eastern Australia's fuel supply.

Justin Loiseau

Justin Loiseau hails from the great united state of North Carolina, where he started his first business at the ripe age of five: melting crayons into candles. With the infamous Crayola Crash of 1994, Justin moved on to study economics and environmental studies as a Morehead-Cain Scholar at the University of North Carolina. He has worked in a variety of sectors across the globe, from management consulting to the United Nations, and once spent three months examining invasive snails in Vietnam. Justin discovered The Motley Fool in 2012 and it’s been love ever since. Creativity, contrarianism, kerfuffling… what more could one want? When he’s not playing the Fool, you can find Justin at the University of Auckland, where he is pursuing a Masters in Economics as a Rotary Ambassadorial Scholar. Justin finds biogas digesters fascinating and can unicycle a mile in seven minutes.

Published October 10, 2013 7:18 am AEDT

Keep calm and don't buy petrol. After a fuel tanker crash killed two people in Sydney's Northern Beaches last week, a safety audit has effectively grounded a large portion of eastern Australia's fuel supply. Over 200 fuel tankers were inspected on Monday, and more than 170 vehicles were found to be in sub-standard condition.

According to ABC News, fuel distribution has been seriously impacted by the inspections, with fuel supplies tight across service stations in the region. A BP spokesperson told ABC that some stations have sold double their normal amounts of petrol, while other stations' supplies have dried up altogether.

Foolish takeaway

While a short-term energy glut doesn't have any direct implications for investors, the resulting finger-pointing could lead to longer-term policy implications.

A statement from Australia's Transport Workers Union (TWU) notes that truck accidents kill 300 Aussies annually, and "large multinational retail clients" are the culprits: "Truck drivers are forced to drive longer hours and cut costs by skimping on maintenance because clients like Coles dictate the going rate in the industry, squeezing truck drivers to cut costs. It's similar to what they do to Aussie farmers."

Retail giants like Wesfarmers (ASX: WES) and Woolworths (ASX: WOW) have been accused of squeezing suppliers across their product lines, from food producers to wineries. With the recent addition of low-cost fuel to these retailers' line ups (a strategy to consistently pull in customers to make other bigger-margin purchases), TWU is adding another provider to its list of persecuted price-takers.

With the public spotlight shining bright on the tragic accident, authorities could investigate past infractions, tighten existing safety standards, and slap more responsibility on retailers to keep their transport lines in line. With razor-thin margins in one of the most competitive industries around, investors will need to keep a close watch on where this emotional debate ends up.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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