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

Changing direction

There are 37.9 million licensed vehicles on our roads (DfT figures to end of March 2018), comprising 31.3m cars, 3.9m LGVs, 1.2m motorbikes, 500,000 HGVs and 900,000 'other' vehicles. Of the cars, 52% are petrol and 45% diesel. However, when you take into account the LGVs, HGVs and buses, diesel currently accounts for over 65% of total road fuel sales. APEA's Statistical Review 2018 reveals that in 2017 diesel demand grew by around 1% (reaching 29.7bn litres) while petrol demand remained virtually flat compared to 2016 (16.1bn litres). And, demand for diesel cars in 2017 dropped by more than 17%, while demand for petrol cars was up 2.7%. Of newly registered cars last year, 53.3% were petrol and 42% diesel, with the balance made up of LPG, other gas and electric vehicles (EVs).

Of course, all of these aforementioned stats are set to change dramatically thanks to the government's stated intent of banning the sale of conventional petrol and diesel cars and vans by 2040. But with the recent publication of government's Road to Zero strategy document came even more questions than answers. The document was said to be 'technologically neutral' but it includes a lot of information about electricity as a fuel.

Top 50 Indie Rusdene, in partnership with Instavolt, has installed two EV charging points at each of its sites. Rusdene managing director, Oli Lodge, says usage varies from site to site, and between January and May the units have been used around 400 times across the network.

Oli hopes the move demonstrates to customers that Rusdene continues to recognise changes within the industry, and continues to reinvest in its businesses. However he believes a move to full electrification is way further down the line than the government is suggesting. "The government has stated they wish to see a ban on the sale of 'conventional' petrol and diesel cars and vans from 2040," he says, but points to the questions that a lot of people are asking ie if there was a move to full electrification, what would be the impact on jobs, taxation, road usage, the grid, the circa £30bn the government receives in revenue from fuel, the North Sea, car manufacturers and, of course, petrol retailers?

"We often hear in cold winters that we are not too far away from the lights going off, so what would happen if everybody is charging their electric cars overnight?" he asks. "What is the cost of upgrading the grid to cope with the additional capacity needed, and where do we get that capacity from? Of course things are going to change, and it's important that Rusdene has put itself on the map in recognising these changes, but I do not think anything is going to happen suddenly. And while we may not sell quite as much fuel in the future, I certainly see us selling petrol and diesel for many decades to come. The oil companies have been acquiring electric charging companies, but still seem to be building new sites and investing heavily within the sector, which indicates to us that they also see the move to electrification as a real one, but not something that is immediately around the corner."

For other petrol retailers, it's a case of 'wait and see'. Joseph Richardson, managing director of Jos Richardson and Son, says his company is prepared for change in the sense that they are interested in the future, are prepared to adapt and have the capital to do so. "We've made absolutely no changes as yet as we believe it's far too early and there is no market in our semi rural locations. Also, technology for high speed charging and affordable power requirements on site are not there as yet. The income from companies looking to rent a parking space to do charging on site is also not good enough to bother with quite frankly." And Joseph believes consumers are being misled on a daily basis: "The coverage EVs get is disproportionate to the take up and the demonisation of diesel is a disgrace."

No workable solution

Mark Wilson, chief operating officer at Fraser's Retail, says he's attended many seminars recently presented by "very learned men", all of whom have a stake in the alternative fuels market: "They are all very keen to promote their products but the reality is, there isn't a workable solution as yet that will have petrol retailers replacing their petrol pumps not now nor in 10 years time."

Asked whether Fraser's is prepared for change, Mark says that would be like putting the cart before the horse. "There are currently 171,500 electric vehicles on the road in the UK and 17,500 charging points give or take, that's a one in 10 ratio, so we are a long way from needing more charging points.

"Until a rapid charging facility exists at a price customers are happy to pay then this is one to let others lead with and for independent retailers to follow."

As the government's Road to Zero strategy document is apparently 'technologically neutral', it does mention hydrogen, which has many benefits over battery electric power but is expensive. However, the government's £20m Hydrogen Supply programme will look to significantly reduce the high cost of producing large volumes of low carbon hydrogen.

E10 and other concerns

Another concern for fuel retailers is around the introduction of the E10 petrol grade. The government's public consultation on the introduction runs until 16 September. The argument for it is that it contains 10% bioethanol compared to E5's 5% and is said to reduce greenhouse gas emissions by 2%. However, there are many arguments against it, not least of all that the higher bioethanol content can dislodge deposits in older engines and fuel systems, causing blockages, and it can also cause some seals, gaskets, metals and plastics to corrode. According to industry data there could be as many as one million vehicles that are not capable of running on E10 fuel.

According to the All-Party Group for British Bioethanol (APGBB) the government's "unwarranted caution" in bringing in E10 is preventing millions of drivers from using the "optimal" fuel for their car.

But Brian Madderson, chairman at the PRA, said the industry's position was that the introduction of E10 should be mandatory rather than market-led. And he believes the government is unwilling to force the introduction through because they fear a consumer backlash. Madderson pointed to the 'shambolic' introduction in Germany where E10 was launched with a lot of fanfare but was not popular with drivers as they found it cost them more and gave them worse performance. In France it was a similar picture.

Meanwhile, the PRA has put in a submission to the Clean Air Strategy Consultation about the slashing of the non-road diesel duty rebates. It says that Red fuel dispensers are particularly common among PRA members in Northern Ireland and in rural Scotland. And many small users have stopped storing this fuel on their own premises because of increasing theft and more expensive insurance, and are therefore more reliant on forecourts for their supply.

The PRA's submission also covers the government's Reducing Emissions by Modal Shift strategy, where the association says a proposed shift from using HGVs on the road to rail is unworkable in its present form, particularly in light of ongoing problems with the rail network.

There's no doubting that more change on the forecourt is coming but in the meantime there's definitely a lot to think about.


More scope for gas vehicles

LPG (liquefied petroleum gas) has a role to play in the UK's road to zero emissions thanks to the fact that vehicles powered by the gas emit less NOx, CO2 and particulates than petrol and diesel vehicles. As such LPG is included in the government's Road to Zero strategy document and Holly Jago, general manager at Autogas Ltd, is confident that will give sales a boost. Jago says there are currently 120,000 vehicles running on LPG here in the UK and she's hopeful that number will grow. In mainland Europe some 15 million vehicles run on LPG and 22 different manufacturers produce LPG-powered cars. However, in the UK LPG systems are still an add-on. "Any petrol car or van can run on LPG," she explains. "Owners retain the petrol system and tank but add on an LPG system and tank." Jago says there's a myth that installing LPG means drivers lose their entire boot space when in fact it can take up just the space of a spare wheel. Conversion prices vary but are typically around £1,500 with payback (LPG is currently c.60ppl) in three-to-four years.
Meanwhile, both CNG (compressed natural gas) and LNG (liquefied natural gas) are being used in the van and truck market. CNG is used to fuel vans and trucks with shorter ranges, typically trucks that come out of a depot and perhaps make four or six deliveries a day. LNG is used for vehicles travelling longer distances. As an example, an Iveco dedicated LNG 4x2 vehicle has a range of 1,600km.
Mark Gilks, sales manager for transport solutions at Calor, says the likes of Iveco, Volvo and Scania offer trucks that can run on CNG and LNG and Ocado has just bought 29 CNG fuelled vehicles. "CNG and LNG work well on fleets as they reduce emissions and other dangerous particulates that can be released into the air," he explains, adding that businesses typically see a return on their purchases in two to two-and-a-half years, depending on mileage."
Gilks says there are currently 27 CNG/LNG refuelling points across the UK, but with the market developing and operators moving to gas, further sites will become operational.

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Weekly retail fuel prices: 5 November 2018
RegionDieselLPGSuper ULUL
East137.39141.77131.15
East Midlands136.83141.29130.21
London137.3164.00142.01130.77
North East136.6271.90142.91129.54
North West136.76141.04129.86
Northern Ireland135.4675.90137.30129.71
Scotland137.10139.85130.11
South East137.69142.71131.15
South West136.8967.90141.98130.79
Wales136.65138.03130.10
West Midlands136.33141.77130.01
Yorkshire & Humber136.0163.90142.42129.74

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