Forecourt Trader - 30 years at the heart of the fuel retailing community

A perfect storm

12 January, 2010
Page 10 

As we launched ourselves into a new year as well as a brand new decade you could have been forgiven for not cracking open the champers. With taxes

and fuel prices on the rise, and motorists watching their mileage, many retailers have admitted to feeling gloomy, and have expressed trepidation about what 2010 may have in store.

Retailer Paul Sykes of Shaw Petroleum said retailers should be prepared for things to get worse before they get better. He explained: "There are several things this year that are likely to hit retailers the upcoming election, taxes going up, cuts in public spending and a lot of companies will end up closing down that have managed to last this long. I think it will be a very difficult situation. The feedback we have been getting on the new Business Rates is that the government isn't listening to our calls to rethink, so we're going to see an unrealistic rise in rates.

That combined with the increased fuel prices and taxes to cover the ridiculous spending that has gone on by the government in the last few years means we are in for a very gloomy year. Whoever gets into government will have to cut back on public spending, so increasing the unemployment in the public sector. And so there will be less disposable income about.

"The most positive thing that will come out of 2010 will be the number of site closures in the industry. This will help those retailers who are left behind these sites will benefit by picking up the extra fuel volume."

The RMI Independent Petrol Retailers Association (RMI Petrol) recently warned of further hikes in fuel prices for this year, with an expected increase of at least 5ppl by the end of March and the possibility of a 10ppl hike by the end of the year.

Brian Madderson, the group's chairman, said: "It's going to be a bit of a perfect storm next year in terms of fuel pricing. By the beginning of April we'll be looking at prices around 115.9ppl for diesel and it's going to get worse because whichever government comes into power, they are going to be hungry for taxes to sort out the nation's parlous financial affairs and it's mooted that they'll be looking at another 2.5% on VAT 20%. That's very much in line with what other EU countries have as their VAT. It is going to be a tough year for both consumers and independent petrol retailers in 2010 and both are really going to feel the squeeze.

"Some of the smaller rural sites are already under extreme pressure on volumes and margins. Brace yourselves for higher fuel costs ahead. And with all this added to the problems retailers are having with biofuels storage and delivery, it's really quite a nightmare."

Retailer David Charman, who is also chairman of the Car Wash Association (CWA), agreed that the future looked bleak. He said: "It's not been a good time really, fuel retailing is tough due to high prices, and car washing is disastrous and has been for the past three months. People don't want to wash their cars when there's snow on the ground and it's so cold. I don't think we've ever seen such a sustained period of cold weather.

"Even adjusting for the snow I'd say fuel volumes are about 10-15% down on the same time last year. It's undoubtedly going to be tougher in 2010 than it was in 2009 there's the threat of the extra Business Rates hanging over our heads for a start. Of course there must be light at the end of the tunnel, but at the moment I haven't even found the tunnel yet."

Paul Sykes added: "The weather has been so appalling that no one has been venturing outside with their cars. Christmas Eve is traditionally the best day of the year for car washing, but our car wash machines were frozen and so we couldn't use them. We lost out on a lot of trade."

Shane Brennan, public affairs director at the Association of Convenience Stores (ACS), said there were some reasons to be optimistic in 2010, and in spite of the economic downturn there had been some opportunities in 2009 such as the rise in popularity of shopping locally.

But he added that with a General Election imminent, there would be three main areas to concentrate on this year as a new government could mean significant changes. Brennan explained: "The first area to watch is social policy, such as healthy eating, alcohol and tobacco. The second issue is that the public deficit will potentially be bad news for tax, such as VAT. And the tax on fuel will be a worry for retailers in 2010. The third is planning and competition issues, and how the government will cope with them. For example the Conservatives recently said they would support the introduction of a Grocery Ombudsman.

"And all this will be going on alongside the new Business Rates, which is a really serious issue for retailers.

"The government has got the Business Rates badly wrong, and if it doesn't sort it out it could be a very tough year. Hopefully though there will be some movement on this."





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Weekly retail fuel prices: 11 December 2017
RegionDieselLPGSuper ULUL
East123.7065.90130.36121.00
East Midlands123.22132.06120.72
London123.2858.90131.75120.77
North East122.41132.57120.03
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Wales122.8952.90129.42120.12
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Yorkshire & Humber122.96133.33120.61

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