Fleet News

News analysis: Panic buying highlights UK’s huge reliance on oil

ALTHOUGH fears of long-term fuel chaos may have been premature, last week’s fuel debacle showed just how reliant the UK is on its supply.

Rising prices and threats of protest caused hysterical panic buying and left many petrol stations dry in the space of a few hours.

Fleet industry figures say the week’s events and the continuing volatility of the market mean it is more important than ever for fleets to look very carefully at their fuel management strategies.

Many say now is the time to restrict the locations at which drivers can fill up in the battle to find the cheapest fuel.

But this is easier said than done, as the cheapest site today might be the most expensive tomorrow, thanks to the daily change in prices, most recently with a four pence per litre cut by some outlets.

Mike Waters, head of market analysis at Arval, welcomed the decision by several supermarkets to cut fuel by 4p per litre.

He said: ‘Clearly, these supermarket chains are eating into their own margins and using this as a tactic to generate ancillary expenditure.

‘With fuel prices differing between retailer sites, it is critical that drivers seek out the best deal and use a fuel purchasing system that gives them access to the widest possible fuel network.’

Adrian Waters, head of commercial fleet sales at AA Business Services, said: ‘Putting more controls in place over where employees buy fuel from is very important, particularly where businesses are footing the bill.

‘Unleaded petrol can be as much as 5p a litre more expensive at a rural garage or service station compared to a supermarket forecourt.

‘One of the ways of monitoring and controlling fuel spend is by using a fuel card, which not only gives fleet or HR managers a detailed weekly report of fuel being spent by each driver, but also details of where they are filling up and how much they are paying for fuel.’

Garry Hobson, managing director of Masterlease, said he expected fuel costs to become much more of a priority for fleet operators. He said: ‘We may see more companies choosing to incentivise employees to opt for more fuel efficient vehicles. Another area fleets may choose to look at is fuel payments. Currently some companies reimburse drivers of larger engine vehicles by paying a higher pence-per-mile than those with smaller engines. This could be removed in order to take away the incentive to get higher fuel consuming vehicles.’

Andy Leech, sales and marketing director of software house cfc solutions, said the majority of fleets do little to control fuel costs and could be hit hard.

He said: ‘Of all the fleets that we have dealt with over the last two years we estimate that less than a third proactively manage fuel. Rising fuel prices are simply treated as a bitter pill to be swallowed.’

Leech said adopting fuel cards, giving drivers advice on where to buy cheaper fuel, and even considering fuel bunkering could result in savings.

He said: ‘At these times, anger tends to be directed towards the government. Whatever the rights or wrongs of this argument, it is highly unlikely that fuel tax levels will be dramatically reduced. Fleet managers could instead look at the range of controls available to them.’

The last week’s events show that the future of fuel costs is far from clear. With no crystal ball available to fleet operators, establishing a clear and effective fuel management system now could save considerable heartache down the line.

Countdown to chaos – how the fuel protests developed and failed to materialise

  • WEDNESDAY SEPTEMBER 7: The Road Haulage Association, says there is a ‘tremendous feeling of unrest in the fraternity’ at high fuel prices. Protestors from the Fuel Lobby, which organised the 2000 fuel protests, say they will act again if fuel tax is not cut. Organiser Andrew Spence threatens to blockade all UK refineries on September 14.

  • SATURDAY, SEPTEMBER 10 – Members of the South Wales Hauliers’ Association vote in favour of staging a 20mph rolling blockade of the M4 in the wake of rising fuel prices. The date is set for Friday, September 16.

  • SUNDAY, SEPTEMBER 11 – Chancellor of the Exchequer Gordon Brown blames high fuel prices on oil cartel OPEC and calls for an increase in oil production. He rules out tax cuts to reduce prices at the pump. The Fuel Lobby says its planned series of blockades on Wednesday will now be extended until Friday to coincide with the anniversary of the 2000 protests.

  • MONDAY, SEPTEMBER 12 – Reports start coming in of hour-long queues at petrol stations. The Fuel Lobby retracts its earlier statement and says no oil refinery blockades are planned, urging the public not to panic and stock up. It urges members of the public to ‘attend’ rather than ‘blockade’ refineries.

  • TUESDAY, SEPTEMBER 13 – Calls not to panic buy go unheeded and long queues for fuel start stretching out across the country. Some filling stations start to run dry and close. Reports suggest a week’s worth of petrol has been sold in just one day.

    Suppliers say they are struggling to cope with demand, due to the issue of getting tankers to filling stations. The UK Petroleum Industry Association (UKPIA) says tanker deliveries have been boosted by 10 to 15%. Gordon Brown still refuses to make any concessions on fuel tax. However, governments across Europe, mired in fuel protests themselves, take action to curb costs.

  • WEDNESDAY, SEPTEMBER 14: The planned day of demonstrations turns out to be a damp squib, with protestor numbers remaining low. Andrew Spence’s demonstration in Jarrow, South Tyneside attracts a total of 12 people. A large demo had been expected at Stanlow in Cheshire, but the only two protestors that turn up are frightened off by a large group of journalists. Organisers say the campaign is meant to be symbolic and says it has the Government ‘on the back foot’.

  • THURSDAY, SEPTEMBER 15: Things return to normal, and the press is left to reflect on a ‘Day of fuel protests that turned out to be a flop’ (The Times). OPEC reacts with surprise to Gordon Brown’s assertion that it is to blame for high oil prices and denies that demand is outstripping supply.

  • FRIDAY, SEPTEMBER 16: Asda and Tesco slash their fuel prices by 4p a litre. Oil prices also start to fall as Hurricane Katrina retreats into the past. Welsh hauliers stage a slow protest, bringing the M4 in Wales to an almost complete standstill. Protestors decide not to block refineries because they believe they have got their message across. Six lorries stage another slow protest on the M60.

  • SATURDAY, SEPTEMBER 17: Shell hops on the price-cutting bandwagon and slices between 2p and 4p off its fuel prices.

  • SUNDAY, SEPTEMBER 18: Calls for a fuel protest in the South West go largely unheeded. Experts say things are returning to normal.
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