They say that the advantage of being experienced is that there are very few situations that catch you by surprise. Having been around the block a few times, when something crops up that seems extraordinary to others you can just give a wistful smile because you’ve seen it all before and, more importantly, you know how to deal with it.
And so it is that tanker driver strikes, monthly supplier price increases, soaring fuel prices and plummeting demand are not new phenomena for this old codger. Back in the ’70s (1970s not the 1870s!) virtually every winter brought a tanker driver strike of one sort or another. In those days you had a little black book of who you could phone to organise ’scab’ loads in unmarked tankers that were delivered in the middle of the night. In the early ’80s we learned to cope with raging inflation and in truth, for many of us, it was only stock profits that gave us a bottom line. Soaring fuel prices? I remember the first Opec crisis when prices virtually doubled overnight. Garages selling Range Rovers went from charging a premium to having to offer a free Mini with every sale.
What I will admit however, is that I’ve never seen times like the past month or so when we’ve suffered from the whole lot all in one go. I never thought I would consider a tanker driver strike as a blessing, but at my sites, demand had been dropping so much that I really needed a bit of panic buying just to give my figures some respectability. One big difference from the days of yore was the attitude of some of the oil companies.
Now let it not be said that Mo’gas has suddenly gone soft (perish the thought), but certainly in the case of Texaco, for one, I have to give credit where credit is due. From taking steps to shift fuel to different depots in advance of the strike to a rep who was constantly in touch to check on which sites were running dry and really needed a load, I thought its performance was a really refreshing change from the old days. How much of this was driven by the fact that if you are purely a wholesaling company, then it’s sort of quite important that you do actually wholesale something, I do not know. But whatever the reason, its efforts were certainly appreciated by this retailer.
There is something very strange about the public’s perception of the forecourt industry. Because you happen to have a petrol station it seems that everyone assumes you are a complete expert on everything to do with the world of oil. It seems that barely a day goes by without someone asking me what the real reason is for the price of fuel going through the roof. Other than simply trotting out ’supply and demand’, the answer, of course, is that I’ve absolutely no idea!
Most experts seem to agree that the root cause is the demand side of the equation, but there appears to be a split regarding the source of the extra demand. On the one hand we have the ’China and India soaking up all the resources’ brigade, and their argument certainly seems intuitively persuasive. If an extra 50 million people suddenly have their lifestyles boosted over a short space of time, obviously it would seem to follow that demand for oil would increase. On the other hand we have the ’it’s all due to speculators and hedge funds’ advocates, and there’s no doubt that the global weight of funds that are being ’wagered’ is sufficient to seriously distort the price mechanism. Unfortunately I have yet to see any genuine statistical analysis of either position.
If I had to choose I would probably give the classic economist’s answer - it’s both! While China may have increased world demand, this cannot explain the huge price surge over a short period - surely that must be the result of massive speculation?
What experience has taught me, however, is that the current situation cannot, and will not, last. High prices mean demand will fall, supply will increase and prices will return to more sensible levels.