May 2, 2008

Anyone who has filled their car up recently will have been unsurprised to see that Shell and BP have just announced record profits. Fuel costs are increasing at a staggering rate; the cost of diesel has gone up 25% in the last 12 months alone. With these sky high costs you’d imagine that the forecourt owners are raking it in, but this is far from the case. Ray Holloway Director of the RMI Petrol Retailers Association (PRA), recently spoke out to set the record straight. ‘Yesterday (29 April 2008), while oil companies announced high profits most forecourt retailers sold fuel at a loss, and this is not an unusual situation for them,’ he said.

Holloway continues: ‘The issues of supply at Grangemouth thrust the issue of fuel pricing back onto the front pages, but the actual prices were not directly affected by that situation. Prices were rising already for retailers and motorists alike as a result of annual recurring high summer demand for oil.’ He added that ‘Most of the sites in the UK branded BP or Shell are actually independent retailers. They work in a challenging business area, with high costs and very low returns. Most are kept afloat by the shop attached to their site.’

The vast profits that are being accrued are generated through their oil exploration activities abroad, which are a separate business to the UK forecourt retail sector. ‘For many, these numbers are unsustainable and they are being forced to close in increasing numbers. Around 300 filling stations shut down every year, and motorists are now noticing gaps in fuel availability, and if it gets worse as expected, they will certainly be inconvenienced when searching for a forecourt in some areas.’

There are around 9,200 forecourts in the UK, including supermarket filling stations. This is the lowest number of filling stations in the UK since 1912. Since the fuel protests in 2000, one third of the filling stations open at the time have disappeared. The proliferation of supermarket filling stations has, in part, led to filling stations margins being drastically reduced in order to compete. Holloway concludes ‘Oil company profits should not be confused with forecourt prosperity.’

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