Forecourt Trader - 30 years at the heart of the fuel retailing community
Carry on complaining
Published:  03 June, 2011

Retailers are again being urged to take action against what they perceive to be 'unfair' or 'predatory' pricing. Andrew Lawrence of Lawrences Garages, who chaired last month's RMI Petrol meeting in Gatwick, West Sussex, said it was incumbent on everyone to write to their MPs where there were problems.

"Unfair fuel pricing you could describe it as predatory, unfair or downright ridiculous really. A supermarket executive on breakfast TV recently admitted fuel was a loss leader, but said that's the way they did things by cross-subsidisation from their main stores."

But it's not just the super-markets. Andrew said many retailers all over the country were also suffering because oil companies on some of their owned sites were selling at prices below which they charged their own dealers, which could be a 2-3ppl difference.

"We want retailers to write immediately to their local MPs with their concerns about the ultimate threat of business closures, which means loss of local jobs and loss of a local refuelling facility, and ask them to approach ministers."

Andrew said the industry was in a state of flux where price seems to be going up one minute and diving down by tuppence the next.

This was making it very hard for independent retailers to compete with the pricing tactics of the supermarkets and certain oil-company owned sites.

"The RMIP is highlighting these pricing issues with government and it's really incumbent upon us all to write to MPs in our particular areas where we have problems with these particular pricing strategies. So if you know of a supermarket site that is causing problems in the local market, with prices which we would consider predatory or unfair, then you must get in touch with your MP. The more pressure we can put on MPs the better. Government will change policy if they get a lot of hassle from their own MPs."

There were many retailers in the audience who gave examples of problems in their own particular areas, and had written to MPs.

Supermarket hype

One complained about the huge publicity the supermarkets were able to generate when they put their prices down. He said motorists believed the hype and filled up on their sites, when in reality the prices may not have gone down to the extent the publicity claimed. "They get all the good press all the time, but they're not really doing it. It's completely unethical," he said. Andrew admitted it was a problem, but added it was not just the supermarkets organisations such as the AA didn't help.

"They [AA] cause a lot of problems because of the misunderstanding of how the price works. They should take more notice of how an actual dealer operation works because it doesn't compare to how a supermarket operates. Last month Asda, Morrisons and Tesco all made big announcements about price cuts. Asda cut the price of diesel by 4ppl and knocked 1ppl off unleaded, guaranteeing that motorists would pay no more than 135.7ppl for diesel and 134.7ppl for unleaded at any of its 187 filling stations.

Morrisons also announced it was cutting the price of unleaded by 1ppl and up to 3ppl for diesel at its 296 petrol stations across the UK.

Mark Todd, petrol director for Morrisons, said: "Wholesale fuel prices are coming down and at Morrisons we always want to pass on savings as soon as we can.

"That is why our customers are receiving an early cut. Clearly rising fuel prices have hit families hard over the past 12 months."

Tesco then followed in the footsteps of Asda and Morrisons by dropping fuel pump prices. A spokesman for the supermarket said: "A vast majority of our sites will get a 1ppl reduction on unleaded and up to 3ppl on diesel." The supermarket also launched its latest fuel promotion giving shop customers 5ppl off for every 50 spent in store.

The news prompted retailers to question what Platts price-lag terms supermarkets were on which could give them more flexibility with their retail fuel prices. Some are understood to be on 12 days and some on seven days, whereas many independents are now on only one day, thus causing huge problems if prices change soon after taking a delivery.


price-lag deals

Flexible contracts on offer

Harvest Energy is open to offering up to a two-weekly Platts price-lag on fuel supply deals if independent retailers request it contrary to the 'one-day' lag that many of the major oil companies are now offering.

Speaking at the RMI conference in Gatwick last month, Ian Welch, key accounts manager at Harvest Energy, said: "Most of our deals are on a weekly-lagged Platts basis. You can do two weeks.

"The one customer we have on a two-week lag is head-to-head with a supermarket. That's all very well while the price is rising because you can sit there and wait for it to come down, but the supermarkets do have deep pockets and could come down straight away."

Many retailers feel that supermarkets have the advantage because it is thought they are on 12- or seven-day lags, but independents are under pressure by oil companies to go to daily deals, which some retailers are describing as "a nightmare".

One retailer said: "You're more likely to be on the same playing field as the supermarket you are competing with if you are on a two-week lag."

Welch added that while Harvest Energy was willing to offer two-week deals, it was only desirable while prices were rising. "We're happy to offer a two-week deal but it does come with a warning to yourselves that you could be sitting out there for a week or so while the market comes down," he said. "If the market goes up you're a winner. Most of our customers take a week." Responding to a retailer's question about why he thinks oil companies are encouraging daily deals, he said: "We don't do daily so we're taking a punt. I guess the major oil companies are going to daily because they don't want to take the risk with longer lags. You're taking the risk out by going to daily. "

Harvest Energy now supplies 10% of all fuels in the UK.

It supplies supermarkets Morrisons and Asda, oil company sites Total and Shell, as well as some Petrogas Applegreen-branded sites and some Park Garage Group Park & Shop-branded sites.




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