Texaco deal fuels debate

My caller, accusing Texaco of two-tier pricing, requested anonymity because he still has some time to run on his contract.

He says that he had high hopes for Texaco when it was taken over by Valero last year but he has since become very disillusioned.

He writes: "The past year has been very hard on fuel turnover and profit. Many Texaco dealers have seen up to a 20%-plus decline in litre sales, while by far the vast majority watch in dismay as the likes of Tesco sell fuel several pence below their buying-in prices. The only way they survive is car wash and shop sales. There has been growing unrest, and lately this anger has started appearing on the Texaco Station dealer forum site.

"Dealers have been asking for supermarket-quality fuels at cheaper prices instead of their high-cost, so-called better-quality Texaco fuels. Texaco has been gaining market share in the commercial business (bus and lorry supply), which can only mean they are offering them very competitive prices. However, it is the dealer market where Valero makes its profit as our buy-in prices stay high."

He adds that in the past few weeks Valero had removed the Platts prices from its website so dealers could not work out their weekly buying-in prices until the first day of the new week. "Too late to buy in at last week’s lower price, or cut stock if prices have gone up.

"When several retailers began questioning what sort of deal Texaco was giving Tesco (they supply 100-plus sites), and why Greenergy was up to 3ppl cheaper on its wholesale prices, all the posts were removed. Texaco retailers are losing serious volume with Tesco etc selling fuel cheaper per litre than they can buy a 42,000 litre tanker full for."

And he concludes: "Now dealers have no effective contact with each other, many are afraid to speak out in case their contracts are put in jeopardy. I hope that I can, in future, make a profit out of selling fuel instead of losing money on it. My Texaco area manager has actually told me that fuel is a non-profit service I should provide to my store customers."

I presented the above to the company and Ruth Kent, communications manager for Valero replied: "All Texaco-branded service stations in the UK are independently owned and operated. We sell fuels to retailers at market-based prices. Retailers are free to set their own prices for the fuel that they offer to their customers, whether they are a distributor, supermarket or independent retailer. In some cases the retailer, particularly supermarkets, may choose to offer price discounts for promotional reasons or to increase shop traffic.

"The retailers’ forum has clear guidelines that have been communicated to all retailers, including our right to remove comments that could imply unfair trading practices. Comments regarding pricing are routinely removed to ensure there is no perception that the forum is used for anti-competitive practices.

"We operate in a challenging business within a highly competitive market and offer quality fuels at market-based prices.

"In addition, we have a commitment to being a good partner focused on building productive, collaborative, and trusting relationships with our customers."

Looking at this as an outsider I must add that, at the time of writing, Tesco is running an ’extreme couponing’ campaign. Bulk-buying certain non-perishables will get customers 10p-off coupons, which can be stacked up to 50p a litre off fuel.

A Tesco spend of £30 could therefore save drivers £30 on fuel for a 60-litre tank, says Martin Lewis’ MoneySavingExpert.com website. It’s pretty well assumed too that Tesco doesn’t usually fund its promotions alone it usually gets assistance from its suppliers.

The cost of money

Faisal Javed, who runs a Total franchised site in Liverpool, would like to buy his own business so he was interested in the piece in the July issue about peer-to-peer lending group Funding Circle, which bypasses banks and offers low-cost options on borrowing.

The most Faisal’s bank would lend him would be around 55% of what he needs. To borrow from Funding Circle you have to be an established and credit-worthy business (no sole traders) and have two years’ worth of filed accounts. Faisal fits the bill although he will need to borrow more than Funding Circle’s limit of £250,000.

A note to those at the other end, ie would-be investors: you’ll earn an average gross yield of 8.7% with easy access to your money.

Faisal will be discussing his situation with Funding Circle and will also look into Merchant Cash Express which provides unsecured funding to micro businesses with a minimum monthly turnover of £3,500 on credit/debit cards. Faisal fits that bill too.

Déjà vu?

Huw Griffiths, who runs GH Griffiths & Sons in Bridgend, South Wales, had been told that he was the only one to have problems with his Tokheim pumps/media screens, so after he read Jonathan James’ nightmare account in our August issue, he got in touch.

"I’ve got six pumps with screens," says Huw. "Cost me £70,000. Had them for 18 months and major problems screens going black and out-of-order signs on pumps. They don’t seem to be able to cure it." Huw has a two-year warranty and is hopeful that Tokheim will be able to extend this to three years.