Gordon Brown’s call for forecourts to cut fuel prices at the pumps in line with the fall in the price of crude oil or risk an Office of Fair Trading investigation is too simplistic according to the Forecourt Division of the Federation of Petroleum
Suppliers (FPS). It fails to do justice to the independent forecourts which are in one of the most competitive markets, working on the lowest of margins.
The supermarkets and major oil company sites are in a unique position as they sell their fuel so quickly. They have at least one delivery a day and are therefore able to react quickly to fluctuations in the wholesale price. Very often, supermarkets use this situation to claim they are, in some way, giving the driver a better deal when, in truth, any price reductions they give do not affect their overall profit margins as they increase the sales in their shops.
Whilst we all like to see prices falling, the majority of garages are independent and have to buy a week or two’s worth of fuel at a time. They generally have a far lower turnover than the supermarkets and the major oil company sites so that it takes much longer to sell the higher priced fuel before they can restock at the lower price and stand a chance of pricing competitively. Having paid a higher price, they find themselves in the unhappy position of either having to maintain their pole price until the next delivery or trying to compete by selling at
a loss. Most independent forecourts are lucky to return a gross profit of between 2p – 3p per litre from a relatively small throughput.
The Prime Minister is unfair to criticise the failure of forecourts in general to follow the supermarkets and apply an immediate price reduction. FPS has commented many times in the past that supermarkets are able to sell fuel at a price lower than that at which independent forecourts can purchase it because they can cross-subsidise from other sectors of their business.
We are confident that members of the public appreciate that independents cannot compete with supermarkets on price over a long period. Many of these sites serve small, local communities and, in rural areas, provide the only shop and other vital services. Villages where the forecourt provides the only shop also risk downgrading to a hamlet when they lose these services, with a commensurate fall in property values.
Independent forecourt closures result in motorists and those travelling cross-country having to drive far greater distances to obtain fuel, resulting in a much bigger carbon footprint than otherwise. We are all conscious of the need to reduce carbon emissions. It is therefore essential that local independent forecourts remain viable. Calls for them to reduce their fuel prices to uneconomic levels and threats of OFT investigations are counter-productive.
Media enquiries to Mark Bradshaw on 07929005806 or email email@example.com
The Federation of Petroleum Suppliers (FPS) Forecourt Division originally began life as Garage Watch Campaign. It was fully integrated into the FPS with effect from 1 August 2007 to operate as its Forecourt Division, alongside the existing Distribution Division.
What began as a campaigning group to highlight problems to the Government, has grown into a bona-fide trade association for the independent forecourt sector in the UK with regular contact with over 5,000 sites.
Owners and operators of retail sites can join as individual members or through a special corporate membership scheme available to independent fuel suppliers. Associate membership is also available for those companies either supplying or seeking to supply the forecourt or associated shop or convenience store.
The FPS was established over 28 years ago and is the trade association for the oil distribution industry. The two Divisions (Forecourt and Distribution) operate independently of each other, but both benefit from the resources of a large pro-active trade association, well-respected within the industry and Government.
The FPS Forecourt Division provides members with a recognised collective voice for the independent forecourt sector. It promotes best practice within the industry and assists members in optimising their business operations by way of benefits and services.
For more information, contact FPS Press Office on 01565 631313
Federation of Petroleum Suppliers Ltd
6 Royal Court, Tatton Street, Knutsford, WA16 6EN
Tel: + 44 (0)1565 631313 Fax: +44 (0)1565 631314