How can a petrolium distribution company make money when diesel prices go up?

Question

My friend owns a small petrol distribution company. They buy fuel from the major companies and sell it to consumers, mainly fleets of trucks such as trucking companies, like CFN or Pac Pride type orgainization. reciently what was a relativly calm stable market has become incredibly volatile. To make a profit the company needs to maintain atleast a 16 cent margin on diesel. The price of fuel being sold in a pirticular tank is averaged over a month with the prices of the fuel that is added over different time periods during the month. When prices dropthe company can lower prices slower than the fuel prices that they are buying to maintain a higher margin, but when prices rise, margins shrink because this company turns over its inventory much faster than the service stations who keep their prices lower due to a lower average cost with the reduced turnover. The co. has to keep their prices in line and thus with a higher average has a lower margin. How this co. make money when prices go up?

Answer 1

It looks to me like they are making plenty of money.