Disappointed, stunned and surprised were just some of the emotions Jet dealers in the South West expressed when they were told they had six months to find alternative fuel supply because ConocoPhillips was pulling out of their region.
At a hotel in Plymouth last June, ConocoPhillips’ management announced to the invited SW dealers that, as from the end of the year, they would no longer be supplying or distributing retail fuels to 29 sites out of Plymouth. The reasons they gave were high distribution costs, supermarket competition and falling volumes with little scope to grow the network in the area.
The retailers in the room were dumbfounded. But, led by Barrie Richards, owner of St Blazey Service Station and RMI Petrol’s representative in the SW, as well as a former Jet dealer council member, Jet executives were asked to leave the room.
"We resolved to do two things," recalls Barrie. "Firstly to co-ordinate oil company interest and secondly to request more time to seek re-supply, particularly as December would not be a practical time to leave the network, given the extent of the national shut down at that time.
"Dealers were stunned by the decision, as there was no indication that ConocoPhillips had anything like this in mind," he adds. "My own Jet deal had barely done a full year, and some sites had up to four years left. The first priority for us all was to create a competitive market for our sites by working together."
All of the suppliers already distributing fuels in the SW immediately expressed interest. Roadshows were conducted by Valero Energy, BP and Harvest Energy, while others chose to make their moves in different ways.
"Early on a trigger point was the Texaco/Valero takeover, which resulted in an early decision for many. However, there was an interesting situation developing with just over half the sites not aligned with only six or seven weeks left before the Jet pull-out," says Barrie.
"This became an interesting time as there was a tremendous camaraderie between all of those left. While it was never intended that we negotiate as a group, those involved towards the final period were particularly eager to ensure that the difficulties with the Jet contract would not be repeated and therefore the wording of any sales agreement became as important as the Platts numbers."
While the Jet supply agreement was fixed for the duration of the contract, the pricing obligation was not and that allowed the oil company to alter its pricing as it saw fit.
"Their pricing proposal would have meant that our businesses would not have been able to compete and certainly would have failed within a short time," says Barrie. "Therefore we issued ConocoPhillips with counter notice to terminate the contract before the new price was implemented, along pre-prescribed timescales within the contract.
"Jet had no loyalty promotion and did not enjoy fuelcard cross-acceptance with any of the big oil company players. However, we all turned in good volumes while enjoying a slender margin share return, shielding us a little from the reality of the market," adds Barrie.
"What we wanted was a good brand at a competitive price and to avoid replacing hard-won full-margin business with low-margin bunker card diesel volume. Had we all had trunk road sites with many ’heavies’ passing by, the result may have been quite different. However there were a significant number of sites within the ex-Jet estate capable of some very respectable volumes for any fuel brand."
The Jet brand is no longer visible in the SW save for on a very small number of rural sub-supplied locations. Valero Energy picked up 12 of the former Jet sites; Harvest Energy signed nine sites (with possibly the greatest volume share of the ex-Jet estate, says Barrie); Gulf Retail took six, while one forecourt moved to Murco, and one site went own-branded.
"Working together has enabled all of us to get something out of this, something we would have otherwise not achieved," says Barrie.
"All of the sites have gone their own way for their own reason and now it’s time to put all of this behind us. May I also express our sincere thanks to Forecourt Trader, which in our darkest times, was willing to describe to the industry, what was ’a story of our time’."