Fuel crisis – what fuel crisis? And lo and behold there was a fuel crisis. It didn’t take long for panic buyers to come out in force, causing huge problems on the forecourts in the week beginning September 14. Nearly a week’s worth of fuel was sold within 24 hours, and card payment transactions were up 25%.
Retailers were then left to count the cost of the fuel-buying panic which was over almost as quickly as it had begun. Sites had run out of both fuel and customers, and were left to watch the tumbleweed blow as their forecourts became deserted for the next few days.
Apart from highlighting, once again, what a crucial role forecourts play in most people’s lives, how did the industry fare?
“I think the industry did the best it could in the circumstances,” said PRA director Ray Holloway. “The speed of the thing was awesome in the way it developed. Monday lunchtime there was absolutely no problem, but by Monday night we had a huge problem. I don’t believe the industry had a chance to deal with it. What took four days in 2000 took only half a day this time.
“I think what I’ve learned from this is that we haven’t got four or five days’ reaction time if it happens again. We’ve probably got half a day. The other thing that surprised me was that the Government seemed to be totally dismissive of the fact there was any reason for a crisis. If there was no reason for a crisis, there wouldn’t have been one.”
However, one thing is for certain – every retailer should have some kind of action plan that all site staff are aware of.
“The owner or manager of a filling station is never on site all the time,” says Holloway. “It is very likely that the cashier is not listening to the radio, so what does he do if he’s suddenly swamped with business? Who does he ring?
“We should take a measure from the Department of Trade and Industry’s Downstream Oil Emergency Response Plan – as soon as there is any kind of panic buying, the industry should move to a minimum purchase – not a maximum purchase – because that would stop people returning for £3-£4 of fuel and adding to the queues. I think a minimum of £20 would be a far better way to address the problem.”
Retailers should also seize the opportunity created by a fuel crisis to win over new customers, according to Holloway: “Given that people panic buy, the chances are they’re not actually your traditional customer, so why not put in a lot of effort to get to know them? Why not learn from retailers like Robert Fraser? Get their email addresses and mobile numbers so you can text them with information, and actually build a rapport with them rather than alienate them. You can always earn out of a crisis.
“The example of retailer Jonathan James serving coffee in the queues – that’s just so clever it deserves to have a reward. I suspect Jonathan’s shop figures for that week were much better than anyone else’s. But he deserves it, because he actually took time to invite people into his premises.
“The main thing is – don’t join the customers by panicking. Think about your deliveries – is it not wiser to drop off your premium unleaded and just make it all unleaded, for example? Another tip is don’t profiteer – it’s a short-term gain. Customers have very long memories, and the media love the opportunity to criticise such things.”
As far as the oil companies are concerned Holloway believes none of them really allow for these sorts of emergencies, and he feels they could do a number of things that would actually help take the pressure off dealers: “The simple things are suspending daily Platts terms, because that’s really an excessive pressure on dealers – you have weekly or better terms; you suspend margin share and you have a minimum margin; repay card transactions quicker, that sort of thing.
“The oil companies could have acknowledged the problems for retailers but I’m not aware that many of them did. If they were confident that it wouldn’t come to a full-blown crisis, they were more confident than I was.”
However Texaco’s general manager for Retail Sales Europe at Texaco, Guy Vigar, said the company had learned a great deal from the fuel protests in 2000 and so had “robust contingency plans” in place to ensure that its service stations continued to be supplied.
“Generally, I think we did pretty well, though some sites reported selling three times their daily throughput and in some areas panic buying was more pronounced than others. We concentrated our priorities on our branded retailer network and worked around the clock to get as many loads out as possible.
“By working with our fuel delivery supplier, Wincanton, we were able to increase deliveries, before, during and after the protests and through good supply management, we were able to give priority to those sites with fuel shortages over sites that were receiving just their regular deliveries. Inevitably some sites did run out of fuel and I am sorry that we were not able to meet everyone’s requirements, but this was not without trying.”
A spokeswoman from BP said the company had had contingency plans in place for the proposed protest but, like the rest of the country, did not know the extent of the proposed protests for the Wednesday until it actually happened. “As it was, the situation was much better than had been expected – less than three protestors at any of our terminals and none at the Coryton refinery,” said the spokeswoman.
“In terms of the panic buying – very few sites ran out of fuel at one stage or another during the Monday and Tuesday and site staff worked extremely hard to cope with the demand from the public.”
An Esso spokesman said: “Although the industry endeavoured to assure motorists that there were no problems with getting fuel to retail sites and none were expected, the media focus inevitability triggered a strong run on forecourt sales. Nevertheless, staff responsible for order taking and truck routing worked around the clock with our delivery contractors to try and best manage the situation. We drafted in extra staff to communicate with our retailers on the status of their deliveries. When it became clear that the protests were very small in number and were having no impact on deliveries, forecourt demand eased. It took a few days to return to normal operations.”
The Shell network experienced considerable raised demand during the week of September 12. “On the Monday and Tuesday, volumes across the network were on average 60% up on the previous year,” said a spokesman.
“However, this increase was largely predicted and therefore additional resources were made available. In addition to the DTI contingency plans readied for use, the business had in place its own cross-functional co-ordination team that was able to manage activities during the build-up in demand and in the immediate aftermath.
“As well as ensuring that Shell’s internal interfaces between its manufacturing, distribution, commercial and retail arms were well managed, the group also proved an effective link with external bodies such as UKPIA.
“Inevitably, as a result of many sites having a week’s fuel sales in one day, the frequency of stock-outs did increase. However, due to the resourcefulness and commitment of our dealers, customer assistants and staff, their number and customer impact were minimised.”
So, can we expect more trouble? “This is not a one-off – we’ll keep coming back to it,” says Holloway. “It could be regional and never actually close down the whole network, but with the high oil price, we’re definitely going to see more of this – sad to say.”
DTI’S EMERGENCY RESPONSE TOOLS
There are a number of measures that can be considered as part of the emergency response to any situation involving fuel supply disruption. For example:
- Demand Calming Measures – a series of sensible measures that the public could use to reduce the consumption of petroleum products at any time.
- Forecourt Supply Management (FSM) – process to restrict the amount of fuel that retail customers may purchase at any one time and the control of filling station opening hours.
- Priority Use Scheme (PUS) – process to define activities that will receive supplies for priority use and a registration scheme to identify who is involved in those activities.
- Bulk Oil Products Allocation Scheme (BOPAS) – allocation scheme for bulk consumers of petroleum fuels for priority use only.
- Designated Filling Stations (DFS) – process to control the supply of road transport fuels to a defined number of UK filling stations that will receive supplies for priority use only.
- Stockdraw – process to allow a reduction in the Compulsory Stocking Obligation in the UK to meet an International Energy Agency request during an international shortage.
- Crude Oil and Imported Products Allocation Scheme (COIPAS) – allocation scheme to share available supplies of crude oil and imported products to make best use of available resources.
For more details on the DTI’s emergency plan, visit www.og.dti.gov.uk