However the RAC says the Government is now collecting £46 from every full tank of fuel and called for further cuts in duty.

In a letter to the Competition and Markets Authority (CMA), Kwarteng wrote that people were “rightly frustrated” that the 5p-a-litre reduction had not stopped prices from soaring to record levels at forecourts.

Kwarteng asked the CMA to conduct an urgent review of the fuel market, and a longer-term study that would examine the health of competition in the market, to examine whether it has hurt consumer interests amid rising prices.

He noted regional disparities in petrol prices, and asked for an initial report of recommendations to “strengthen competition” in the petrol market by 7 July.

“Drivers should be getting a fair deal for fuel across the UK,” Kwarteng wrote.

“I am writing to you to ask that the CMA conduct an urgent review of the fuel market … to explore whether the retail fuel market has adversely affected consumer interests.”

The competition watchdog had previously made Asda and Morrisons sell a number of forecourts during private equity acquisitions.

The average price of a litre of petrol at UK forecourts rose by 7p last week, according to data firm Experian Catalist, hitting a new record of 183.2p on Thursday. That pushed the cost of filling a typical car over the £100 mark.

Today the RAC said average fuel prices have shot up to new records yet again with petrol hitting 185.04p and diesel 190.92p, an increase of 2p a litre on both since Thursday.

This takes the cost of filling a 55-litre family car with petrol to £101.77 and has led to the first ever £105 fill-up for diesel,” RAC fule spokesperson SImon Williams said.

“Incredibly, the Government is now raking around £46 in tax from every full tank,” he said.

“The speed and scale of the increase is staggering with unleaded going up 7p in a week and diesel by nearly 6p. This must surely put more pressure on the Government to take action to ensure drivers don’t endure a summer of discontent at the pumps.

“We hope the Government’s persistent talk about the importance of retailers passing on March’s 5p duty cut fully is a precursor to an announcement of a deeper cut this week. If that’s the case, it’s very welcome, albeit overdue as the 5p cut has been well and truly overtaken by events on the wholesale market since then.”

Petrol retailers have blamed surging wholesale prices, saying oil refineries had not passed on a fall in the price of crude oil since the highs during the early days of the war in Ukraine.

Jack Cousens, the AA’s head of roads policy, welcomed Kwarteng’s move but called for “more urgent action”.

“To relieve pressure at the pumps we need an immediate 10p cut to fuel duty,” he argued.

“Longer term, the CMA should consider extending the pump price transparency available in Northern Ireland to the rest of the UK. The Consumer Council’s fuel price checker stimulates competition and has led to drivers there enjoying the lowest fuel prices in the UK,” Cousens said.

Trade unions and drivers have warned that the record increase in fuel prices could force staff who rely on their vehicles for work to quit, including essential workers.

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In an interview with Ireland’s Forecourt & Convenience Retailer, Valero’s director of operations in Ireland, James Twohig, sets out how the industry is moving toward zero carbon.
Recent measures include the increase in the Biofuel Obligation from January 1 and the drive to switch from E5 to E10, he says.
“Our industry has been managing change for the past 100 years and will continue to adapt and transform as we go forward into the future,” Mr Twohig says.
“With environmental and climate change concerns and the urgency of these to the fore in more recent times, there is no doubt that the challenges facing us are greater now than at any time previously. Government policy and legislative changes are more frequent and society’s expectation is for us to play a central role in addressing climate concerns.
“Our industry’s aim is for Ireland to achieve carbon neutrality by 2050. This means fundamentally altering the way we do business and the liquid fuels we provide.
“Society has used fossil fuels as a provider of cheap and reliable energy over the last century and reducing our dependence on these will take time. Indeed, while we believe that this step change will only start to gather tangible momentum after 2030, we are committed both as an industry and as a corporation to orchestrating positive change now.”

E10 switch

Mr Twohig says the fuel industry called on Minister Ryan last year to mandate the introduction of E10 to improve the transport industry’s carbon footprint.
“Switching from E5 to E10 in Ireland would result in an annual industry reduction in CO2 emissions of 90,000 tonnes. This would be in addition to the reduction of 330,000 tonnes of carbon that biofuel blending currently achieves,” he said.
“The increase in the Biofuel Obligation from 11% to 13% on 1st January 2022 is just one step that has been taken and further initiatives are planned for future years that will see a reduction in the environmental impact of road fuels in this country.”
Mr Twohig said Valero is also committed to reducing its carbon emissions.
“Already a leader in the production of renewable fuels as the world’s second largest renewable diesel producer and corn ethanol producer, with more than $3 billion invested, a further $2 billion is scheduled for investment on low carbon projects over the next three years,” he says.
“We are also on track to offset/reduce 63% of our global refining GHG (greenhouse gas) emissions by 2025 with a view to increasing this to 100% by 2035.
“We recognise that low carbon fuels are part of the energy mix and are steadfast in our commitment to positive change. We know that our market will require less petroleum and more lower carbon fuels in the future and are working to ensure that all Valero refineries, including the one that is local to us in Pembrokeshire, Wales, have the capability to meet progressive renewable fuel requirements.
“As our industry undergoes significant transition in the years ahead, so will we. Our business is focussed solely on the supply of fuel and as a significant fuel supplier currently, Valero and the Texaco brand will continue to be part of the energy story,” Mr Twohig says.

Comprehensive knowledge
A qualified mechanical engineer who has held roles in several UK and Ireland companies before joining Texaco (Ireland) Limited in 1992 as an Area Sales Manager, Mr Twohig has a comprehensive knowledge of all areas of the business.
He has worked across the industry, from lubricants to commercial sales, retail and fuel cards in both the UK and Irish markets and is now responsible for Valero’s business in Ireland.
“Valero is a wholesale supplier of quality fuel to independent service station operators throughout Ireland. We operate under the Texaco brand and our products, which have been available in Ireland for many decades, are renowned and trusted for their consistent high quality, reliability and performance,” he says.
“Our strategy is to partner with operators who maintain high standards and provide a compelling, quality store offering to their customers. We believe that this, combined with our quality fuel offering and the renowned strength of the Texaco brand, delivers a very compelling offering to the Irish motorist.”
The pandemic has been very disruptive across the industry and especially so for service station operators who have been trying to navigate these unprecedented conditions.
“As fuel volumes initially plummeted and many operators felt it necessary to change their store focus from ‘convenience’ to ‘grocery’, a challenging site environment developed for some. Many have had to become adept at managing over the shorter term, being adaptable and changing direction as the hour or day requires in order to keep their forecourts open and their stores running,” Mr. Twohig says.
“Valero’s response is to work with individual operators and to provide support as necessary. We view our business as a multitude of long-term partnerships with our operators and are aware that their success within their local communities ultimately results in Valero enjoying a successful business in Ireland too.
“We’re fortunate to be a Fortune 500 company so have been able to withstand the profound impact that the pandemic has had and have thankfully been in a position to provide support where required,” he says.

Brexit fallout
The other key event that has been impactful for Ireland as a country has been Brexit.
“With a significant lead in to the country’s departure and a close working relationship with our UK colleagues already in place, our lead-in and planning times were set over the longer term and executed as we originally envisioned. We’ve been subsequently fortunate to enjoy a seamless transition to an EU with Britain,” Mr Twohig says.
“As our company is a significant importer and provider of energy to the country, we also had the comfort of working closely with the Irish Revenue Commissioners to ensure continuity of supply across all sectors of our business.”
Valero’s overall strategy for the years ahead remains simple, Mr Twohig adds.
“With our longer-term view, we will work to welcome more strong, independent service station operators to the Texaco brand and to meet their expectations by delivering a quality fuel offering in a simple and professional manner,” he says.
“Working closely with our current operators remains a steadfast priority as well and we’ll continue to assist them with their business and growth objectives.
“Finally, we intend to give back to the communities from which we draw our livelihoods through our Valero Volunteer Programme, our Texaco Support for Sport initiative and our renowned Texaco Children’s Art Competition, which celebrates its 68th anniversary this year and is widely recognised as the longest running arts sponsorship in this country.”

Future strategy
Mr Twohig concludes by laying out the company’s strategy for navigating business in the future.
“Our commitment to energy transition and to being a better and more considerate environmental performer is robust,” he says.
“Within our Irish business, we need to remain focused and execute our long-term retail strategy with consideration and efficiency. We are committed to being a quality fuel supplier and to supporting strong, independent service station operators in a professional and proficient manner with a recognisable and trusted brand.
“We want to enhance our relationship with operators further, to continue to offer a competitive position through the use of the Texaco brand, and to be more flexible in our dealings so that as life evolves, their businesses, and in turn ours, will continue to grow in a safe, environmentally friendly and profitable manner,” he says.

To read the full interview in Ireland’s Forecourt & Convenience Retailer yearbook, click HERE.

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Petrol prices have been creeping up since May – with the figures on 21st October on the GlobalPetrolPrices.com website showing Ireland at 1.594 euro per litre.

Meanwhile the PRA has just warned UK retailers that they expect the record pump prices of 142ppl for petrol and 148ppl for diesel set in April 2012 to be eclipsed before the end of October.

Fuel pricing trends are on the rise again: IFCR asked the PRA’s Brian Madderson – why?

“There are two main reasons,” he said. “The worldwide pandemic has caused new agreements between oil producers in Russia, Saudi and other OPEC countries to curtail the output of crude oil. This has had the effect of pushing up the price of Brent crude – putting it up to around $75 per barrel.

“The second reason is technical,” explained Brian. “European refineries are all having shorter production runs because a barrel of oil contains a wide variety of different products for different sectors – so demand for marine oil for shipping has taken a downturn, as has home heating oil – and the aviation industry is on its knees, resulting in oil companies limiting their output.

“Short production runs mean the amount of petrol being produced is limited. Companies then have to compete for short supplies – which in turn has pushed the wholesale price up.  I can’t see much change in that until towards the end of the year, when demand for heating oil goes up along with marine and aviation.”

Price wars

Brian doesn’t believe that this will lead to the type of price wars at the pump that we’ve seen in the past – involving the multiples.

“The multiples are fighting their own price wars with the discounters such as Aldi and Lidl – so because they are giving away their margins on grocery, it’s less financially economic for them to heavily discount fuel,” he said.

Between the price of crude, refineries reducing production and the budget – prices could hit the highs of 2012 – but as Brian explained “that’s not good for inflation.”

Car wash chaos in UK and NI

One of the most difficult issues Brian and the Car Wash Association have tackled in the recent past is the challenging differences in car wash regulations across the four jurisdictions of the UK throughout the pandemic – which impacted considerably on forecourts in Northern Ireland more than counterparts in the rest of Ireland, which did not have the same draconian restrictions.

“It was a significant disappointment that the Northern Ireland Assembly was the only one of the four UK countries that declined to make any change to restrictions on car washing. In England and Wales, they differentiated between automated and hand washes with the latter banned. The situation was much the same in Scotland, but included self-serve jet washes, rollover and conveyor washes. In the last few weeks of the restrictions England tried to ban the use of self serve jet washes – but it made no sense as everything else on the forecourt is self-serve – from ATMs, to fuel pumps and hot coffee – so why on earth did the Department of Health take this bizarre action?

“We need to make sure it doesn’t happen again,” said Brian. “They reversed the decision, with a new definition of automated car washes which excludes jet self-serve. What happened in England was that most local authorities ignored that – they were not interested in enforcing it.

“Northern Ireland was different. It didn’t allow any car washing – except for the inside of vans carrying food. We worked hard on this issue, enlisting the help of local MPs like Ian Paisley and others, we wrote copious letters to Ministers – but it was too difficult to get it changed. I am afraid that the Assembly was just too stubborn and obstinate – during the pandemic other sectors were hit by similar nonsensical restrictions, in my view imposed by the civil servants.”

Business rates

One area where the PRA did have a key success in its lobbying efforts was regarding business rates.

“We challenged the Northern Ireland Assembly and various departments over their decision not to allow shops on forecourts above 300 square metres to have the full rates holiday.

“All filling stations got the three months rates holiday from April to June 2020, then they got a further month in July – but after that only filling stations with shops up to 300 square metres could have the full 12 month rates holiday” said Brian.

“The PRA said that’s not fair – there is a big difference in Northern Ireland whereby for many people in rural areas, there is an absence of supermarkets. For large parts of the population they can only go to their local convenience store, generally on a forecourt. Land & Property Services agreed it should be 500 square metres and they put that to the first Minister who agreed to move it up to 500 sq mtrs. This meant that between at least 40 and 50 larger convenience stores were able to benefit and save hundreds of thousands of pounds by not needing to pay rates in that fiscal year 2020 to 21. That rates holiday is finished, now it’s back to the standard rate but it was a big benefit for many at the time – we got several letters of thanks including from Henderson Retail and others.

“That was entirely down to the PRA – we achieved that.”

Fuel quality and E10

On the 1st September in mainland UK the new, higher spec E10 containing up to 10% ethanol (helping to reduce carbon levels) became available on forecourts – but not in Northern Ireland or Ireland. Why?

“Northern Ireland is unable to introduce E10 yet because of blending capacity at terminals. It can’t be shipped in by sea, already blended, as ingressive water would contaminate the fuel – it has to be transported only across land,” explained Brian.

“We understand work is in hand to increase blending capacity at Northern Ireland’s terminals in Belfast and the one in Derry/Londonderry but it won’t be until the end of the second quarter in 2022 – so around another six months.

“In England, Scotland and Wales its obligatory from 1st September. One big concern is that there are a number of older vehicles and classic cars with engines not designed to be able to take fuel containing 10% ethanol – estimated at around 700,000 vehicles across the UK – plus classic cars which will have to use super unleaded (which remains E5). That commands a premium so these motorists will need to pay more.

“It may also affect smaller forecourts in Northern Ireland that only have two tanks – one for diesel and one for standard petrol. Owners will be likely to turn their petrol tank to E10 which means people who own older and classic cars will have to go where there is super unleaded available.”

The Irish government is considering following Britain’s lead in making E10 fuel the standard petrol blend at filling stations too.

(Britain joined the US, Australia and several European countries in making E10, a blend of fossil fuel and up to 10 per cent biofuel, the standard petrol from September 21, with Northern Ireland due to make the change early next year. The biofuel component of E10 is ethanol, a form of renewable energy that can be produced from agricultural feedstocks. The previous standard in the UK was E5, the current standard in Ireland).

PRA annual event

The PRA has just held its annual event in Northern Ireland at the Crowne Plaza, Shawsbridge, updating retailers, product suppliers, regulators and technical experts.

”It’s quite remarkable that during the pandemic the number of filling stations in Northern Ireland increased slightly – even company owned sites went up by 10% from 55 to over 60 sites – Go, Nicholl and Maxol have been opening new stations,” Brian says.

Electric Vehicles

What next for Electric Vehicles, IFCR asked Brian?

“Most of the large groups are waiting to see which way the technology runs on this one – demand is currently very low – but there will be rapid changes. Currently the cost of installing an EV charger on site can be as much a quarter of a million pounds – that’s a huge investment, with maybe only a few customers using it each day.

“We will see a slow increase, but it will take a long time to make a return on your investment.

“There is also range anxiety and charge point anxiety.

Hybrids

“There are two types of hybrid – one which you charge and needs a power point, the other is self-charging – which runs on petrol. If you live in a big city a hybrid or EV may suit – it may be a second or third family car used for regular short journeys. At the minute, we are not recommending investment in charging points to members without offering words of caution.”

Hydrogen strategy

Recently the PRA welcomed the UK government’s hydrogen strategy.

“Hydrogen is taking off in Asia in countries such as Japan and South Korea and in Europe for Scandinavia and Germany. Motor manufacturers are slowly including hydrogen models and going further with it – so if I was a betting man, I’d say in ten or fifteen years hydrogen will be the way to go. I would advise our members, rather than investing in EV infrastructure right now, to invest in car washing facilities for a quicker and more certain return. Hand car washes have had their day. If a  hand car wash is properly regulated, and pays living wages and there’s no labour abuse, then their costs will go up considerably.

“Whether a motorist is driving a hydrogen, EV or fossil fuelled car, they will need cleaning. Modern high quality automated car washes are becoming hugely popular again, and I would say, that’s where the wise fuel retailer should be investing.”

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