Retailers turned out in force to attend last month’s PRA Live & Local event in the grand setting of Wrest Park Mansion in Bedfordshire, where the headline speaker was Andrew Bonnington, the editorial director for strategic oil markets development at S&P Global Platts.

For despite the many other developments that have taken place in the fuel and convenience retailing sector, there’s no doubt that the price of fuel, and how it is determined, is one of the great mysteries and uncertainties in the life of a fuel retailer. Bonnington was there to "shed some light" on how Platts assesses the oil market, as well as on recent trends in the European petrol and diesel market, and the UK’s increasing reliance on imported fuel.

He explained that Platts Market On Close (MOC) is the process Platts’ editors use to assess prices for crude oil, petroleum products and related swaps. The MOC approach to methodology operates on the principle that price is a function of time. It was explained that MOC is a structured, highly transparent process in which bids, offers and transactions are submitted by participants to Platts’ editors and published in real-time throughout the day until the market close. Following the close, Platts editors examine the data gathered throughout the day, conduct their analysis and develop price assessments that reflect an end-of-day value. The MOC process has been used in Europe since 2002.

"Oil trading is a complex market," he said. "Most of the oil trading is in long-term contracts, not in the spot market, but it’s that spot price that we publish every day that is used as a reference price." He said Europe was a key focus of the oil market, while the assessments used in the UK were also very important and widely used. North West Europe, in particular three locations Amsterdam, Rotterdam and Antwerp (ARA) are the trading hub for European oil, particularly diesel.

"ARA is particularly important for oil price assessments. A lot of the prices that are used in the retail sector, all around Europe, will typically focus on the price we publish in this ARA market because it is a big benchmark for trading crude oil and refined products."

Matthew Williamson, head of valuation retail at Christie & Co, said 2015 had seen the conclusion of a seismic shift in ownership, that has seen oil companies divesting assets and tying purchasing independents into supply agreements. Oil company owned sites had fallen to 1,216, while the number of independent sites had steadied at 5,828.

"Up until the crash, when we lost sites not necessarily because they were particularly poor performing sites, but because the alternative use value certainly in the major cities and conurbations being offered by residential developers outweighed their value as service stations. That disappeared in the downturn, but we’re starting to see that again, certainly in the South East, where a site is perfectly sustainable and profitable as a business, but there are still potentially alternative use valuations which offer more.

"Also we’re seeing far more new-to-industry sites being built, by not just the bigger groups, but individuals as well."

In terms of the recent headline deals such as by Euro Garages, MRH and the Motor Fuel Group he said it was interesting to note that the companies/funds buying into these operations are not million-pound businesses, but billion-pound funds of money. "They’re looking for capital to buy into a sector, to buy an existing business and expand. They’re not just buying the bricks and mortar, they’re buying into the corporate structure, the management team, the brand and they’re buying into the fact that they can buy 400 sites, and then buy another 400 sites over a five-year period. They’re going into these businesses with a very clear exit strategy for four, five or six years’ time.

"These are companies that 10 years ago would have invested in large hotel chains, care home chains." He concluded that the lack of forecourt sites coming onto the market, meant prices were strong, and hence was a good opportunity for those interested in selling up.

Other interesting presentations at the event included one by Andy Bolton, business development manager from the Safety Pass Alliance (SPA), which has teamed up with the PRA to create an e-learning product that enables new and existing employees to identify and control the risk of working on a forecourt. Based on training guidelines from the petrol retail national steering group (PRNSG),it comprises three modules induction, daily operations and safe unloading of tankers. He said the training offered a consistent approach for all staff, even on multi-site estates. The learning takes about two-and-a-half hours to complete, with a printable certificate available on successful completion.

For more information on future Live & Local events, see the PRA website: