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Oil company profit = petrol retailer loss

1st May 2008 Print
‘While oil companies announced high profits most forecourt retailers sold fuel at a loss, and this is not an unusual situation for them,’ said Ray Holloway, Director of the RMI Petrol Retailers Association (PRA) commenting the price of fuel and its impact on the future viability of the forecourt sector.

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.’

BP and Shell are international oil companies. Most of the profits made by BP and Shell are the result of oil exploration activities abroad. This is a separate business to the UK forecourt retail sector.

Holloway explains: ‘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.

‘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.

Holloway adds: ‘Oil company profits should not be confused with forecourt prosperity.’