Running on empty

Gordon Brown met oil industry chiefs last week amid mounting pressure to act over spiralling fuel prices. The PM used the meeting in Scotland to warn that high oil prices were here to stay, and were not just a UK problem but part of global demand outstripping supply. The comments came as

the Government unveiled moves to boost North Sea oil production by up to 70,000 barrels a day.

The meeting followed weeks of turmoil as the price of a barrel of oil continued to rise almost by the day, with truckers staging another protest and urging the government to give them a rebate on diesel - or face the consequences.

Hundreds of lorry drivers clogged roads leading into London, while others held a demonstration in Wales, also calling for the government’s 2p tax increase on fuel - which has already been deferred once and is now planned for October - to be scrapped.

With horns blaring and banners waving, there were also threats from the protesters that, if their demands were not met, their next move would be to blockade the refineries. In 2000, such blockades led to panic buying on forecourts and almost brought the country to a standstill.

Protests also took place across the channel, with fishermen blocking French ports and an oil refinery, causing French President Nicolas Sarkozy to call for a Europe-wide VAT cut to ease the plight of road users.

Motorists in the UK have also continued to be hit in the pocket as it increasingly becomes more and more expensive to fill up.

The AA even reported an increase in the number of drivers breaking down due to running out of fuel in recent weeks - up 11% on average.

Edmund King, president of the AA, said: "The record price at the pumps means that too many motorists are running on empty. Some may be shopping around for a better deal but run out of petrol before they find one.

"Other drivers perhaps assume that the £30 they put in the tank will get them as far as it did two months ago, but it doesn’t." King recommended motorists follow the AA’s eco driving tips to get that bit more from their fuel.

And while there was no evidence that petrol and diesel volumes were down in general at the pumps, the price hikes do seem to have been changing people’s buying habits.

A spokesman for the Retail Motor Industry Federation (RMIF) said its members had reported a shift in sales: they were selling less fuel during the day, and more in the evenings.

"We can only assume that domestic use is down," the spokesman explained. "And that people are planning ahead more, using their second car less. If there is a stay-at-home partner in the family, they seem to be avoiding the supermarket or the school run in favour of asking their working partner to pick up the shopping or the kids instead. It’s a more economic use of same amount of fuel."

Retailer Nick Fraser, whose family run five forecourt sites in Buckinghamshire, Oxfordshire and Wiltshire, said fuel volumes were still pretty similar to last year. But he was concerned about just how high fuel prices could rise in the near future.

He said: "People are still coming in for their usual fuel purchase, only now their usual £10 or £20 spend doesn’t go as far as it used to. We don’t have too many real concerns at the moment, but when it gets to £1.50 a litre, then I think we’ll need to worry."

Simon Hockings, who owns five BP-branded forecourts in the Lake District, doesn’t think the industry will have to wait that long to see a knock-on effect. Running sites in more rural locations, Simon, who runs the business with his two brothers, says: "Where our sites are, people will think twice before driving to the Lake District and having a day or two on holiday because it’s just getting so expensive to do that now.

"That might affect us this year. I know we had a busy bank holiday at the end of May, but I’m sure when we look at the figures over the coming year, we’ll struggle to keep volumes the same."

Meanwhile, some independents say the sharp rise in fuel prices over the past few weeks was making it more of a struggle to compete with their larger and more powerful rivals.

Derek Lodge, who runs Hampshire-based Rusdene Services, said: "I don’t think there’s any doubt that people are struggling to pay for fuel at the moment.

"But the biggest problem we have as retailers is not being able to put our prices up quickly enough to reflect the increased prices. The market won’t allow us to put our price up because the competition aren’t putting theirs up. Because the prices have been rising so sharply in the past few weeks it’s been very difficult for retailers to get their prices up to cover the purchase price.

"Margins are no doubt falling. Traditionally the industry puts its prices up when the general price goes up. But some of the bigger companies are being very slow to raise theirs."

Another factor for forecourts is how rising fuel prices can lead to more instances of drive-offs, with greater losses. According to the latest figures by the British Oil Security Syndicate (BOSS), the estimated total losses suffered by the forecourt retailers increased by 13% last year.

The Forecourt Crime Statistics report also revealed that 87% of losses came from people driving off without paying and claiming to have no means of payment.

Jaginder Mudhar, who invented the Drivestop system to help retailers combat the problem, says orders for the device have gone through the roof recently.

Drivestop, which stops motorists from driving off without paying by spiking their tyres, now has a three month waiting list which is growing rapidly.

Jaginder, known as Jag, says: "I wanted the business to grow slowly so I could control it, but since fuel prices have started to rocket, retailers have started to realise how vulnerable they are to drive-offs.

"Whereas before they might have lost a few quid in a drive-off, it could now be £50 or £60 or more. And ours is the only proven solution to stop drive-offs.

"We’ve even had interest from Australia and New Zealand. I’m having to employ more staff to cope with demand - I’m so busy I don’t even know how many we’ve now got installed around the country. My brain’s exploding with it all!"

But what of the general economic forecast for retailers? Shane Brennan, public affairs executive of the Association of Convenience Stores (ACS), believes many are suffering at the moment. "Retailers generally are coming under increasing pressure, and they’re having to weather the storm.

"Apart from the fuel side there are issues such as increased delivery costs to be considered. But overall, on the store side, the retailing of food is usually quite recession-proof.

"People still need to buy food. I don’t think retailers should be too concerned."