The film of Jeremy Clarkson rallying bystanders in Lincoln to help push his electric car to a charge point when the battery ran flat may have been one of Top Gear’s most comedic moments, but it will have done nothing for motorists’ trust in electricity as a reliable alternative fuel for cars.
It is still early days for alternative fuels despite the impending launch of 12 electric cars next year following the launch of the Nissan Leaf and Mitsubishi iMiEV but the face of the UK fuel supply industry is undeniably changing.
The sale of Chevron’s Pembroke refinery in Wales to US oil company Valero was completed last month, and Shell’s Stanlow refinery in Cheshire has been sold to the India-based Essar Group. Still up for sale are Murco’s Milford Haven and Total’s Lindsey refineries, and PetroChina has acquired a 50% stake in the INEOS-owned Grangemouth refinery.
The changes in ownership will make for an uncertain future for many of the major fuel brands in the UK.
Oil company and independent sites are continuing to feel the brunt of supermarket growth. According to UKPIA’s 2011 Statistical Review, launched in July, by the end of last year there were 1,259 supermarket-run sites 14% of the network. Their market share has also soared, and now nearly 40% of the total retail fuels market is captured by supermarkets. The share of retail sales of diesel by supermarkets has risen from 35 to a little over 36% while petrol declined to 39%. With fewer sites across the UK network, the average throughput of all filling stations has risen markedly since 1994 to around 9mlpa, but a huge disparity between company, independent and supermarket sites remains. Currently, the average supermarket site throughput is 12mlpa while independents are averaging barely more than 2mlpa, claims UKPIA. Road transport demand has been on an upward trend for decades and despite a flattening in growth during the recession, demand is forecast to increase in the future, according to the Department for Transport. By 2025 demand is predicted to grow by almost 60% from 1990 levels, although at a slightly lower rate than past decades.
And, according to the Department of Energy and Climate Change, while total road fuel sales have shown a long-term increase since 1970, they have dropped slightly over the past three years by an average of 2.7%, due to a combination of higher prices driven by the cost of crude oil and the economic recession.
Of total sales, the share of petrol has been falling, while that of diesel has been rising due to more diesel vehicles on the road. Sales of petrol currently represent around 45% of road transport demand by litres sold, with sales in 2010 down by almost one billion litres on the previous year to 20.4 billion litres. Despite falling slightly in 2008 and 2009 due to higher diesel prices and the economic situation, diesel sales showed signs of recovery in 2010 with an increase in sales of around one billion litres when compared to the previous year.
Mike Waters, director for market insight at leasing and fuel management company Arval, says that growing mpg performance of new cars and the rise in diesel transmission would continue to put a squeeze on fuel volumes. "Mpg performance of new cars is going up rapidly so cars coming into forecourts need less fuel," he says. "Diesel cars also account for 60% of new car registrations and are gathering pace year after year."
It’s not just the continued rising popularity of diesel cars that will affect volumes of carbon fuels. Waters says the drive-train mix of the car parc will be very different in the future. A government committee on climate change projections claims that by 2030, 40% of new car sales will come from conventional cars; 40% from plug-in hybrids, and the remaining 20% from electric vehicles. In contrast, 70% of the mileage covered will be in conventional cars; 20% in plug-in hybrids; and 10% in electric vehicles.
Legislation is without doubt forcing the development of alternative technoloiges and fuels, and heavy investment in new technology from all manufacturers will continue. "Hybridisation will ensure that petrol and diesel remain the fuels of choice for at least the next decade," says Waters. "Fuel volume sales decline will be partially offset by increased mileage and vehicle sales. In 10 years’ time all technologies will be in the market, but the vast majority will still be internal combustion engine-based." When it comes to the electric vehicle market Waters says incentives remained essential in the short- to medium-term, along with infrastructure development.
Motorway service operator Welcome Break is already getting behind the electric market with a nationwide network of charging points.
The retailer has installed electric car-charging points at South Mimms Services on the junction of the M1 and M25, Michaelwood Services on the M5 in Gloucestershire, Green Park Business Park on the M4 in Reading, and Oxford Services near Waterstock.
By the end of this month there will be 12 Welcome Break sites with electric ’top-up zones’ installed by Ecotricity, which has so far had applications from 5% of the UK’s electric vehicle owners for swipecards to operate the charge points.
Rod McKie, chief executive officer of Welcome Break, says: "We are very excited about working with Ecotricity. There is no doubt that the electric car will arrive on Britain’s motorways and Welcome Break wants to be at the forefront of giving the modern motorist what they want, when they want it. As hybrid and electric cars become part of everyday life, Welcome Break will have the facility to fast-charge them, giving electric car drivers the opportunity to travel the length and breadth of the UK."
Each charging post will be located outside the main entrance, with two sockets that can be accessed by registering for a free swipecard and, within 18 months, all 27 Welcome Break motorway services will have charging points, meaning that electric car drivers (and motorcycle riders) will be able to drive from London to Edinburgh or Exeter completely free and with vastly reduced emissions.
But according to a recent report by the RAC Foundation, just 215 electric cars were bought under a government scheme to encourage the take-up of green vehicles in its second three months of operation. In the first three months, 465 electric cars were purchased.
Under the Plug-In Car Grant scheme, which began on January 1, 2011, individuals and businesses have been able to apply for discounts of up to £5,000 on the purchase of cars producing 75g CO2/km or less. Taking into account all 680 cars purchased under the programme, the RAC Foundation says there are currently fewer than 2,500 electric cars registered in the UK out of a car fleet of 28 million.
The report says the figures show just how difficult it will be to get UK motorists to own and drive the greenest cars available on the market and so cut carbon emissions. If all 680 cars were bought using the maximum £5,000 grant then, according to RAC Foundation calculations, £3.4m would have been spent on subsidies by the government out of a total of £43m, which has been put aside until the end of March 2012.
Professor Stephen Glaister, director of the RAC Foundation, says: "The RAC Foundation backs this scheme, but the figures show the mountain we have to climb if the national car fleet of 28 million vehicles is to turn truly green. Even with the grants, electric cars are still much more expensive than similar-sized petrol and diesel models.
"Despite the lower fuel costs associated with electric cars, the high purchase price means it will take owners several years to reap the financial benefits of not choosing fossil-fuel powered vehicles.
"In the short term motorists will have to think long and hard about whether electric cars give better value for money than the best conventional and hybrid models."
Glaister raises three big questions for the future: Will the cost of electric vehicles come down? How long will batteries last? And what will happen to petrol and diesel prices?
"The sums are going to change significantly but no one can be sure how," he says. "Add depreciation to the equation and you see the economics of green motoring is a grey area."
LPG was once mooted to be the fuel of the future but as duty levels have slowly crept up, many motorists and retailers are seeing it as a far less attractive option.
According to UKPIA’s 2011 Statistical Review, the gradual reduction in the duty differential between LPG and alternative fuels has impacted on the sales of LPG/petrol cars, which has caused LPG sales to fall to 204 million litres, down from its 2006 peak of almost 250 million litres.
According to the latest figures from Catalist, there are 930 forecourt sites retailing Autogas LPG. On top of this, there are a further 370-plus non-forecourt outlets where motorists can fill up. Autogas’ partnership with Shell means that one in every three of the oil company’s owned sites retail LPG.
Jem Aldridge, general manager of LPG supplier Autogas, says: "As the fuel duty on LPG has increased so has the duty on petrol and diesel. At the last two duty increases, in October and April 2010, LPG duty increased 0.55ppl and 0.71ppl whereas duty on unleaded petrol increased by 0.76ppl and 1ppl respectively. As a result, although LPG isn’t half the price of unleaded and diesel, as it once was, those refuelling with autogas LPG will be paying between 50 and 60ppl less."
Aldridge says the most suitable sites for LPG tend to be those with good wet fuel volumes and on major routes or in heavily populated urban areas. In the past 12 months, Autogas has installed new refuelling facilities at Shell Hayle in Devon, Texaco-branded Barking Service Station in Essex, and Shell Forest Hill in London. As part of recent Shell acquisitions it has also refurbished installations at several sites including Shell Broadmead in Bristol and Shell Penhale in Devon.
The introduction of biofuels is the single biggest change to road fuels for decades, claims UKPIA’s 2011 Statistical Review. The government is pressing ahead with targets under its Renewable Transport Fuels Obligation (RTFO), which was introduced in April 2008 with an original target of 5% biofuel content in road fuels by 2010/2011. This was revised due to sustainability concerns.
The targets for the biofuel content of road fuels are now 4% by 2011/2012, rising to 5% by 2013/2014.
Ken Popat, who runs Barking Service Station in Essex, installed an LPG pump at his newly redeveloped site in November last year. His LPG sales are doing better than expected. "LPG has gone amazingly well double the target we had budgeted for," Ken explains. "The performance is partly because one nearby petrol station has closed temporarily for three months but we have still exceeded our target."
Ken has been particularly impressed by the service from his LPG supplier, Autogas. "The service from Autogas is excellent. We get deliveries every day and they give us cash credit.
"At this time that really helps us. We sell nearly 4,000 litres of LPG a day and our margin is 7ppl so it’s much better than petrol."
ADVANCE OF ADBLUE
Sales of fuel additive AdBlue are continuing to grow with more than 100 UK forecourts now bulk dispensing, and a further 500-plus selling AdBlue in 10-ltr bottles, according to supplier Air1.
Nigel Williams, forecourt sales manager for Air1 in the UK and Ireland, says: "We estimate about 15% of AdBlue is picked up on the road and that this is rising.
"Also it is believed that about 40% maximum of the UK commercial fleet are using AdBlue so there is still a lot of growth to come from this sector."
Air1 supplies 83 of the forecourts dispensing AdBlue and more than 450 of those sites selling 10-ltr packs. "Further growth is anticipated from the van sector and further in the future the car market," adds Williams.
To help drivers find their nearest forecourt selling AdBlue Air1 has launched an ’app’ for Apple devices. Says Williams: "This has significant relevance to the retail forecourt market as it is the first-ever AdBlue locator mobile app which uses GPS technology to identify the nearest Air1 Adblue filling station, closest to the driver’s location."