How oil giants could force petrol prices to pounds 7 a gallon 'Once individual companies have towns to themselves they will chargewhat they want. That could easily be six or seven pounds'

Source: Sunday Mercury Publication date: 2000-05-07

MOTORISTS could be paying pounds 7 for a gallon of petrol in just five years' time, some experts are warning. Concern is growing that giant oil companies are attempting to further increase their monopoly by killing off competition now - to feed on a captive market of car owners later.

An investigation by the Sunday Mercury can today reveal 200 filling stations are being forced out of business in the Midlands every year.

Many of them are simply unable to compete with the lower fuel prices offered by supermarkets and the giant city forecourts of huge multi-national oil producers. SIMON MOWBRAY reports.

'Major oil companies are deliberately waging price wars against smaller competitors to put them out of business, creating pockets where consumers have little or no choice'

VILLAGERS in one area of the Midlands face an 18-mile round-trip to their nearest petrol station.

That means owners of high-performance cars, for example, pay about pounds 3.60 just to fill up.

The journey faced by some motorists living close to the Fosse Way, Leicestershire, is the longest journey to a filling station currently faced by anyone living in the Midlands.

But petrol industry analysts are now warning that it is soon to be repeated across the region.

Until now, anger has mainly been vented at the government for charging 80 per cent tax on petrol, making motoring in Britain among the most expensive in the world.

But now it is feared that oil giants are manipulating the market to line their own coffers and will soon drive the price of petrol higher and higher.

Last year, about 200 petrol stations closed down in the Midlands alone, with more than a dozen shutting down along some of Birmingham's busiest roads.

They include the Texaco filling station in Coventry Road, Yardley, one of the city's busiest arteries carrying thousands of cars in and out of the city every day.

Texaco, a relatively small player in the UK, denies it is being squeezed out of the market although it seems motorists were keen to take advantage of cheaper fuel at the nearby Asda supermarket.

Figures obtained by the Petrol Retailers' Association show the number of forecourts nationwide has fallen by more than half in the past 30 years.

The association's director, Ray Holloway, told the Sunday Mercury: 'In 1970 there were more than 40,000 petrol stations in Britain.

'By 1990 that figure had fallen to just 24,000 and our latest figures show there are just 13,000 filling stations serving a population which owns more cars than ever before.

'There is growing evidence the major oil companies are deliberately waging price wars against smaller competitors to put them out of business, creating pockets where consumers have little or no choice.

'We estimate that petrol stations are currently going out of business at the rate of between 1,000 and 2,000 a year, so there could be just around 3,000 left within five years.

'Once individual oil companies have whole areas or towns to themselves they will be able to charge what they want. That could easily be five, six or seven pounds a gallon based on current prices alone.'

Britain's 'Big Three' petrol companies - BP, Esso and Shell - occupy more than half the petrol market between them and are slowly building strong relationships with the nation's biggest supermarkets.

Safeway runs BP's 43 forecourt shops with plans for 57 more by the end of next year.

Esso has also struck a deal with Tesco where the supermarket giant stocks and runs its shops, fuelling speculation that it won't be long before Sainsbury jumps into bed with Shell.

All three supermarkets, however, are free to buy petrol from the cheapest supplier and they currently charge around 78p for a litre of unleaded fuel.

Prices at the major petrol producer's outlets remain steady at around 79p or 80p a litre - about pounds 3.60 a gallon - while small independent garages struggle to make a profit at about 82p a litre, even though they often buy their petrol from the sameoil companies.

All three of the big oil conglomerates deny operating anti- competitive practices, a view echoed by the supermarkets.

The Government has also refused to investigate claims that the petrol market's major players are operating strategies which border on monopolisation.

However, in Australia and America oil companies have already been banned from running petrol stations in the interests of fair competition.

Both countries' authorities decided they were deliberately stifling competition and creating monopolies.

Mr Holloway, the former director of BP's Spanish operations, added: 'We cannot understand why our government is taking this stance when there are clear precedents in other parts of the world.

'Australia has introduced a blanket ban on oil companies running stations, while 18 American states have ordered the same.

'The nightmare scenario is that if Britain does not follow suit then it will be too late.

'We have already seen supermarkets put our local shops out of business and charge us more for basic groceries and this is no different.

'Shell already charges more than pounds 4 a gallon on the Isle of Islay in Scotland because it is the only supplier and it gets away with it.'

All three major oil companies denied Mr Holloway's claims.

Brendan Lomax, for BP, said: 'There is intense competition in the petrol market. The only time we all charge the same prices is when garages are clustered together because everyone keeps in line with each other.'

Shell and Esso both denied they were trying to put anyone out of business and said they welcome free competition.

Safeway, Sainsbury and Tesco all insisted that their low price policies on petrol supported competition.

A spokeswoman for the Office of Fair Trading said: 'We reviewed competition in the petrol market two years ago and ruled that supermarkets which had come into the marketplace had encouraged competition.

'If consumers want to go to supermarkets or an Esso station rather than their local independent outlet then that is their choice.'

Mercury Comment - p18.

Publication date: 2000-05-07

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-- Martin Thompson (mthom1927@aol.com), May 08, 2000