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

Diesel dilemma

Diesel has grown to dominate the road fuels market in the UK, driven by government tax incentives for car drivers. In 2001, with the government seeking to reduce CO2 emissions, the greater efficiency of diesel engines compared with petrol made it the obvious choice, and tax rates were adjusted accordingly.

The incentives had the desired effect with sales of diesel cars growing from 14% of the market to parity with petrol cars by 2015. Petrol, which had been the dominant road fuel with more than half the market in 2001, has declined ever since and had its lowest recorded monthly sales in January, while diesel's growth has taken it to record sales levels that far out-stripped the capacity of the UK refinery industry to produce it.

But then in 2015 the Volkswagen scandal broke, turning the spotlight on diesel engines. Suggestions that had been around for a long time, that diesel engines were responsible for pollution in city centres and for emissions that were killing people, suddenly gained traction. London, where pollution levels often exceed legal limits, has been at the forefront in pushing back against diesel vehicles.

In February, the Mayor of London Sadiq Khan announced a £10 toxic 'T-charge' for the most polluting vehicles, which would be implemented from October, he then called on the government to introduce a scrappage scheme for diesel cars.

toxic state

Khan said: "The toxic state of our air leaves us with no choice but to rid our city of the most polluting diesel vehicles. It is shocking that nearly half of new car sales in the UK are still diesel vehicles and the national system of vehicle excise duty still incentivises motorists to buy these polluting cars. I'm urging government to immediately review this policy and I've delivered a detailed report on how government can deliver an effective national diesel scrappage fund. One that both fairly compensates motorists and rapidly helps clean up our filthy air. A national diesel scrappage fund is the cost-effective way to deliver significant emission reductions while reducing the economic impact on those most affected, such as small businesses, charities and low- income households.

"For years government has incentivised and encouraged people to purchase diesel cars so it is only fair that it now helps people to switch to cleaner alternatives. The government needs to help us clean up the dangerous air in London."

ultra-low emission zone

This has been followed up by plans for an ultra-low emission zone in 2019 covering the centre of London. Any diesel cars that do not meet the Euro 6 standard introduced in 2016 will be charged £12.50 for entering the zone. Commenting on the mayor's announcement, RAC roads policy spokesman Nick Lyes said: "Diesel motorists in particular are going to have to think carefully about their driving habits or be hit by new taxes."

And referring to reports in the Sunday Times (April 2) that the government is lining up similar plans for other cities, he added: "Drivers in other UK cities will also be waiting nervously to find out what plans the government and local authorities have for them when it comes to vehicle emissions-based charging."

For forecourt operators, and their suppliers, who have invested huge sums in adapting to the government's pro-diesel policies over the past 15 years, the sudden change in direction is frustrating. Paul Muncey, head of network sales, retail, at Certas Energy, said: "The demonisation of diesel car drivers has to stop. In general, these are the very people who responded to the government when it was actively encouraging us all to buy diesels to help 'improve the environment'. Everyone can see through the actions of councils, it's another money-grabbing initiative. The latest diesel engines from the top three German manufacturers are the cleanest ever but if that is not good enough for the long-term good of the planet, the government has to start thinking strategically and create a long-term plan if it is serious about phasing out the diesel engine.

"Many Gulf retailers have invested tens of thousands in reconfiguring their pump and tank layouts to provide their customers with diesel grades at every pump island and the fuel suppliers, including Certas Energy, have invested significantly in the development of diesel products including premium grades. Change is possible and achievable but not by a knee-jerk reaction."

Greenergy, the UK's largest supplier of road fuels, has invested heavily to ensure it can import sufficient quantities of diesel, but says it has the flexibility to cope if the market changes. Greenergy chief executive Andrew Owens commented: "We agree that air quality concerns are, over time, likely to drive privately-owned and fleet-car usage increasingly towards petrol engines, although large commercial vehicles (which account for more than a third of the UK diesel market) are likely to remain with diesel.

"Our import infrastructure is inherently flexible and can shift between petrol and diesel to reflect changing patterns of demand. As well as our deep-water diesel import capability, we also operate the UK's only dedicated petrol blending facilities and we can expand these."

Support for the efficiency of diesel engines also comes from the Low Carbon Vehicle Partnership (LowCVP). Its managing director Andy Eastlake said: "While our focus on dramatically improving the air quality in our cities is absolutely necessary, we must not take our eyes off the ball in terms of carbon reduction.

"We believe there is a like-for-like CO2 advantage in running diesel versus petrol in motorway/long-distance use. Transforming the diesel car fleet to deliver the low air quality emissions performance we are seeing from the latest trucks is very challenging, but in motorway operations a highly efficient combustion engine, such as diesel, is currently the lowest-carbon practical solution.

"We need to ensure we use the most appropriate technology in each situation."


Vital statistics

Usage of diesel has seen a meteoric rise between 1990 and 2016, while petrol has seen a steady decline.
In 1990 diesel usage was 12,892m litres, while petrol (leaded and unleaded) was more than two-and-a-half times greater at 32,771m litres.
Diesel usage then grew year-on-year for 25 of the next 26 years (all except 2009) to reach 30,059m litres, while petrol declined year-on-year for 25 of the next 26 years (all except 1998) to 17,100m litres.
HMRC stats for January 2017 show the decline in petrol continuing, as it fell to the lowest monthly level on record at 1,351m litres. However, it should be noted that January tends to record the lowest consumption of the year.
On a monthly basis diesel hit an all-time high in November 2016 of 2,625m litres and plateaued at 2,624m litres for the following month.
The main reason for diesel's growth has been the increasing proportion of diesel cars in the UK.
In 2000, diesel cars accounted for 14% of the new cars sold but, with tax incentives driving diesel sales, by the end of 2014 they had overtaken petrol with 1,240,287 diesels sold versus 1,184,409 petrol ones.
Petrol cars have climbed back ahead of diesel since then. Petrol finished 2016 with a 49% market share versus diesel's 47.7%.

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Weekly retail fuel prices: 13 November 2017
RegionDieselLPGSuper ULUL
East122.9762.90129.22120.30
East Midlands122.51131.19120.13
London123.0159.23131.32120.49
North East122.2163.40130.26120.15
North West122.3953.80130.05119.91
Northern Ireland121.09125.70118.82
Scotland122.68128.95119.79
South East123.2069.90130.92120.88
South West122.77128.85120.30
Wales122.4253.90128.26119.82
West Midlands122.0958.90130.41119.94
Yorkshire & Humber122.3453.70132.45119.99

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