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Era of cheap supermarket fuels ‘gone’, motorists told

Wendy McCague — Thu, 08 Dec 2022 11:10:12 +0000

Motorists should not expect to see a return of supermarkets using cheap fuel to lure in shoppers, an industry source has claimed.

They spoke out after weeks of criticism from motoring groups and fuel price campaigners that supermarket petrol stations are failing to reflect plunging wholesale fuel prices.

Data supplied by the AA and RAC has consistently shown costs for unleaded and diesel becoming cheaper at many independent forecourts, with supermarket fuel at around average or just below average levels.

They argue the sector should be leading the way on fuel prices due to its bulk-buying power, after Brent crude oil nudged levels not seen since January on Tuesday.

The pair are pushing their case at a time when the industry regulator is investigating British fuel price behaviour.

RAC fuel spokesman, Simon Williams, said: “There is yet more pressure on the biggest fuel retailers today to pass on savings to drivers as the price of oil has dipped below $80 for the first time since the start of the year causing the wholesale cost of petrol to tumble to 105p a litre and diesel to 119p.

“If a cut of at least 10p a litre doesn’t come soon it will be yet more evidence of ‘rocket and feather’ pricing for the Competition and Markets Authority (CMA) to take note of.

“The disparity between average pump prices at 158p for petrol and 182p for diesel and their wholesale equivalents is truly shocking.

“Even taking account of major retailers’ buying cycles, we can see no justification for them not cutting their prices significantly.”

UK supermarkets have historically charged around 3.5p per litre less at the pump than the UK average.

Fuel was effectively subsidised as part of the big four chains’ efforts to grow their respective grocery market shares.

But that changed last year when COVID pandemic restrictions ended and oil prices shot up – pushed even higher this year by the effects of the war in Ukraine.

The source suggested that the increased costs that supermarkets were grappling, largely linked to the war, meant they were now more focused on delivering value in areas other than fuel to keep essentials down in price as much as possible.

They said that, as a result, fuel was no longer a loss leader and pre-pandemic pricing behaviour was “gone”.

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UK petrol retailers told to pass on fuel duty cut

Linda Stewart — Wed, 18 May 2022 08:42:08 +0000

The UK government has raised concerns that petrol retailers are not passing on the recent cut in fuel duty, after diesel prices hit another record high.

Business Secretary Kwasi Kwarteng told petrol bosses the competition regulator is monitoring the situation.

However, the Petrol Retailers Association said margins were “often not enough to cover operating costs”.

Chancellor Rishi Sunak implemented the 5p per litre cut in fuel duty in March to reduce the price of fuel for motorists.

In a letter to the industry, the business secretary said the public was “rightly expressing concern about the pace of the increase in prices at the forecourt”.

He said people were frustrated that the fuel duty cut “does not appear to have been passed through to forecourt prices in any visible or meaningful way”.

“It is also unacceptable that different locations even within the same retail chain have widely different prices,” he wrote.

Mr Kwarteng said his officials recently engaged the Competition and Markets Authority about the issue, as a result of “perceived intransigence to date”.

“I have been reassured that they will not hesitate to use their powers to act against petrol stations if there is evidence that they are infringing competition or consumer law,” he said.

UK diesel prices rose to a record of just over £1.80 a litre on Monday, the RAC said.

After the previous record of £1.79 in March following the Russian invasion of Ukraine, prices dipped but have risen again in recent weeks.

The RAC said petrol prices went up by nearly 3p a litre since the start of May and were £1.66 a litre on average.

It said retailers are taking an average profit of 2p per litre more than before the chancellor’s 5p duty cut.

But Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent forecourts, said comparing pump prices against wholesale prices “only gives a partial picture”.

Once “additional expenses” such as storage and delivery costs are taken into account alongside the “volatility of product prices”, retailers’ margins are “often not enough to cover operating costs”, he said.

He added that if the government wanted to lower pump prices, it should reduce fuel duty by more than 5p.

“5p per litre did not represent a substantial enough cut to ease the burden of rising prices on motorists,” he said.

“While the chancellor was announcing it, oil prices rose and effectively cancelled out the reduction. In addition to this, sales volumes of petrol and diesel are still not back to their pre-pandemic levels.

“Supermarkets and independent fuel retailers are competing vigorously with each other on the thinnest of margins.”

The row follows a warning that supermarkets have also not passed on the fuel duty cut amid falls in wholesale fuel prices.

The RAC motoring group does not believe the top four supermarkets – Asda, Morrisons, Sainsbury’s and Tesco – are doing enough to help customers cut their fuel bills.

RAC fuel spokesman Simon Williams said: “Despite operating just a fifth of petrol stations in the UK, the big supermarkets are responsible for around half of all fuel sales so how they choose to price petrol and diesel has a huge impact on what drivers end up paying.”

He added: “When wholesale fuel prices fall dramatically it can be enormously frustrating for drivers when pump prices don’t start coming down. It normally takes one retailer to effectively ‘fire the starting gun’ and cut its prices in order for others to follow.

“We know that the biggest retailers tend to be reluctant to reflect falling wholesale prices at the pumps day-to-day, yet they seem to pass on increases quickly when wholesale prices are rising. This can often be to the detriment of drivers.”

A Sainsbury’s spokesperson said: “We understand that the cost of living is a real challenge for many households and we are committed to helping our customers as much as we can.

“We lowered prices the day the chancellor announced fuel cuts so that our customers could benefit as soon as possible.”

Morrisons said it took the full 5p from its prices at 6pm on the day of the chancellor’s announcement.

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Belfast filling stations run out of fuel amid shortages

Linda Stewart — Thu, 07 Apr 2022 08:51:19 +0000

A number of Tesco filling stations in Northern Ireland have been forced to ask customers to look elsewhere for their fuel, after running out during the week.

A sign had been placed outside a Tesco in Craigavon on Monday, reading “Sorry. No petrol/diesel” , while similar signs and cones were placed at petrol stations at the Knocknagoney and Newtownbreda Tesco Extra Superstores in Belfast.

Other stations throughout the wider city area have been struggling with fuel shortages, with the Sainsbury’s petrol station at Forestside being reduced to one pump, and some diesel pumps at the supermarket’s Hollywood Exchange store tied up.

A Sainsbury’s spokesperson said, “Some of our pumps at our Forestside petrol filling station are temporarily closed. All our sites are receiving more fuel and we’ll reopen the pumps again as soon as possible. We’re sorry for the inconvenience this may cause.”

The fuel shortages follow a small drop in petrol and diesel prices last week, after Chancellor Rishi Sunak cut fuel excise duty by 5p .

The Consumer Council of Northern Ireland said last week that the average price of petrol and diesel had dropped by 3.4p and 1.9p respectively.

Although the cut in fuel duty came into force last Wednesday, many customers may still have to wait to see any real change while retailers work through stock already purchased at the previous wholesale price.

Consumer Council spokesman Richard Williams has called on retailers to pass on savings to customers as soon as possible.

He encouraged drivers to use the Consumer Council’s online Fuel Price Checker, which breaks down average cost by area.

More than 100,000 people have signed a petition calling for further cuts to fuel duty. The milestone means the petition, which calls for fuel duty and VAT on fuel to be slashed by 40% for two years, will now be considered for debate by MPs.

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Panic buying sparks fuel shortages as NI customers head for border: Special Report

Linda Stewart — Thu, 10 Mar 2022 15:47:11 +0000

Panic buying at the pumps returned with a vengeance this week as customers raced to fill up their cars before unleaded and diesel prices rise any further.

Retailers in Northern Ireland also fear they will see an exodus of customers heading across the border to load up on fuel as UK pump prices climbed to record levels.

This week customers reported that diesel supplies had run out at a number of filling stations in Northern Ireland, including Tesco in Glengormley, Newtownards and Lisnagelvin and Sainsbury’s in West Belfast.

A spokesman for the forecourt at Sainsbury’s in west Belfast said diesel supplies had run out last night, but unleaded was still available.

The RAC said pump prices broke records once again on Wednesday.

New records

Fuel spokesman Simon Williams said: “The average price of both petrol and diesel climbed to new records again on Wednesday.

“Unleaded is now 159.57p a litre while diesel increased by another 2p to 167.37p – making for a rise of more than 5p in two days. A tank of petrol is now almost £88 while diesel has now gone over £92.”

Diesel appears to be on a clear path to £1.70 a litre, he said.

“As this is an average price, drivers will be seeing some unbelievably high prices on forecourts as retailers pass on their increased wholesale costs,” he said.

“But there was a hint of better news yesterday on the wholesale market with substantial drops in both petrol and diesel which could lead, in a week or so, to a slight slowing in the daily pump price increases and records being broken less frequently.”

UK government should follow suit

Retailers in Northern Ireland say they expect to see an exodus of thousands of customers heading across the border to fill up at cheaper forecourts following the Republic’s announcement of excise duty cuts of 20c per litre on petrol and 15c per litre of diesel.

Retail NI urged the UK government to follow suit and immediately introduce a package of measures to reduce fuel duty and cancel the planned hike in National Insurance.

Chief Executive Glyn Roberts said: “Our members are experiencing out of control energy costs, which is impacting on the running of their businesses. With the huge increases in petrol and diesel set to continue for the foreseeable future, we believe the UK Government should immediately reduce fuel duty cost and cancel the planned increase on National Insurance.

“These actions would not only assist independent retailers, it will also help working families who are struggling to pay for petrol and diesel.

“There is a perfect storm of problems facing our economy and the Government needs to listen to the business community and more importantly act.”

Little impact

However, Irish Government cuts in excise duty on petrol and diesel were expected to make little impact on pump prices that have soared due to Russia’s war on Ukraine.

As the cuts kicked in, the average diesel price in the Republic had soared to an all-time high of €2.04c a litre, and petrol had risen to €2.01, with prices are predicted to continue rising. While some stations have reached highs of diesel costing €2.14 per litre, others were selling the same amount for as little as €1.95 yesterday afternoon.

The soaring fuel cost is in stark contrast to last year when the national average price of a litre of unleaded was €1.25, and diesel was €1.17.

A Government cut in excise duty, which came into force at midnight, is set to take 20c off the price of a litre of petrol and 15c from a litre of diesel.

However, the effect will not be felt at the pumps for a number of days and the Government and fuel suppliers expect further price rises across the board.

Even while announcing the reductions yesterday, Finance Minister Paschal Donohoe admitted that rises in recent days had already offset the measure.

He said there was a limit to how much the State could insulate the country and economy.

Wholesale price rises

The cut in the State tax take will last until the end of August and amounts to 20c on a litre of petrol, 15c on diesel and 2c on marked gas oil – or “green diesel” used by farmers – although there is no reduction on home heating oil.

Mr Donohoe said it was a one-third change in the level of excise duty on motor fuels and was “very significant” – however, he admitted prices would probably increase further.

Fuel suppliers have warned that cuts in excise duty are likely to make little difference, with repeated wholesale price rises.

Des Kee, who operates the Robert Kee & Sons Ltd forecourt in Laghey, Donegal, says they haven’t yet been able to drop the price fully as per the government announcement, as the government will not rebate fuel already delivered.

“We received deliveries with the old duty paid yesterday,” he said on Thursday March 10.

“However on the flip side we did not increase the price on that delivery, so we are taking a hit.

“We will not be able to reduce the price until possibly Sunday and then probably the wholesale price will have risen again.”

No difference

Another supplier said: “The cut in excise duty is not going to make any difference at all because tomorrow morning, we will have another wholesaler price rise. The price has already gone up by the time we are alerted. We don’t have the option to even get delivery in; it’s too late,” he said.

“As it is, we are making a loss selling our diesel at €2.09. People think it is us who are putting up the price. It’s nothing to do with us. We are the first port of call for angry customers, and we are actually at the mercy of forces outside our control.”

John Donaghy, from Donaghy’s Filling Station in Muff, Co Donegal, said he expects more drivers from Northern Ireland to cross the border for fuel.

“The cut in fuel excise duty will lead to a bigger price differe

On the northern side of the border, Garry Jennings, of Jennings Fuels and Lubricants in Fermanagh border village Kesh, said people won’t buy fuel locally unless the system is radically overhauled.

“It’s 21% cheaper in the south as it is, so if they cut duty by 20% that’ll make it around 40% cheaper,” he said.

“The UK government needs to consider the revenue it’s going to lose. There will be no revenue coming from people in Northern Ireland filling their lorries and cars in southern Ireland.

“We’re in a crisis. People can’t afford it. The Treasury needs to do something about that now. It’s going to be too late in a couple of months when lorry men, the haulage industry and buses are all parked. In rural Fermanagh, we depend on the road.”

Loss of revenue

Mr Jennings said the government needs to consider the revenue they’re going to lose by not reducing VAT and duty.

“It’s a no brainer. If they don’t reduce the duty and the taxes, everybody will go to southern Ireland and they’ll get nothing.”

Kevin McPartlan, chief executive of the Fuels For Ireland group that represents fuel suppliers, agreed that motorists wouldn’t see a sudden drop in prices despite the overnight reduction.

“The Government is reducing the excise duty, but it’s not collected from consumers; it’s collected from suppliers, and that’s been paid for already for the fuel that’s under the forecourts at present,” he said.

Mr McPartlan said if the Government wanted savings to be passed to consumers straight away, it should give a rebate on the excise duty that has already been paid on fuel in tanks at filling stations.

“In all but the most extreme circumstances, people will see the impact of the excise cut in three or four days because of the average delivery cycle,” he said.

“So a place that got a delivery yesterday will have another delivery in three or four days, and that will be at the lower rate of excise duty.”

Mr McPartlan added that if wholesale prices increased faster than the duty decrease, then actual pump prices would not drop.

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Sainsbury’s store closure sparks Brexit pull-out fears

Linda Stewart — Wed, 20 Oct 2021 15:47:07 +0000

The planned closure of one of Sainsbury’s stores and its petrol station in Northern Ireland early next year has sparked fears that the supermarket may be reconsidering its future here.

Unite says more than 100 workers’ jobs are at risk and questioned whether Brexit was a factor in the decision.

Sainsbury’s said the decision to close its Craigavon store and petrol station was “not taken lightly and is based on a range of factors”.

Describing the decision as “difficult”, the supermarket said it is doing everything it can to find alternative roles within Sainsbury’s.

‘Huddle’

Staff at the store said they were told of the closure ‘in a huddle’ this morning.

Unite regional officer Taryn Trainor called on the company to ensure that 109 workers who now face the prospect of losing their jobs are redeployed.

The supermarket would not confirm how many workers are affected, and how many can be redeployed, but said the store and filling station will close early next year.

Ms Trainor said: “This morning’s announcement will be hugely concerning news for the 109 workers at the Craigavon supermarket who now face the prospect of losing their livelihoods in the mouth of Christmas. Unite has been on the ground engaging with our members to charter a course to secure protections and guarantees from this employer.

“There is absolutely no excuse for this decision. Last year and despite the pandemic lockdown, the company still made a clear profit before tax of £356 million pounds. Sales have surged in the last quarter suggesting that the company will make even higher profits in the year to come.

‘Paying the price’

“Sadly however, this company expects the workers employed at its Craigavon site to pay the price for increasing those profits even further – as their store is not judged profitable enough.

“We are seeking guarantees that the mostly low-paid workers facing the threat of joblessness will be found alternative employment elsewhere with costs of redeployment being met by Sainsbury’s. It is unconscionable that a worker earning a bare living wage of £9.50 an hour should not be expected to cover such costs.”

Ms Trainor also called on Sainsbury’s to confirm its commitment to the post-Brexit Northern Ireland retail market.

“There are fears that this closure could be a weathervane for more to come. The rationale offered by Sainsbury’s for this closure include changing demographics which makes little sense except that as a cover for the impact of post-Brexit trading arrangements under the Northern Ireland Protocol,” she said.

‘Extremely vocal’

“Sainsbury’s has been extremely vocal in recent months highlighting the impact of Brexit on reduced choice of products on shelves here in Northern Ireland. They have also had to use competitors to supply stores in Northern Ireland. These factors would obviously impact profits.

“We need have a commitment from Sainsbury’s that they are committed to Northern Ireland for the long-term. Unite will be engaging with our members in this store to determine our next steps in response to this devastating announcement,” said Ms Trainor.

The supermarket has said customers could continue to shop online and at its stores in the surrounding area, including Dungannon, Armagh and Lisburn.

Sainsbury’s partnered with local wholesaler Henderson’s early this year to help manage post-Brexit disruption. The move meant availability “hasn’t been affected as much as I initially feared”, Emer Compston, store manager for Sainsbury’s Craigavon, said last month.

Covid-related costs

Sainsbury’s said it had dropped to a £261m loss in April as a result of Covid-related costs and more than £600m of restructuring charges for its Argos transformation programme. This offset its surge in revenues, with grocery sales for the year up 7.8%.

Sainsbury’s employees have been notified of the decision to close the store and petrol station next year, a company spokeswoman said.

“We understand this will be an unsettling time for those affected and we are doing everything we can to find alternative roles within Sainsbury’s,” she said.

The supermarket giant said that in the year to 6 March, Covid costs “to help keep our colleagues and customers safe” had been “high”.

However, it said it expected profits to bounce back in the coming year.

‘Huge shock’

Upper Bann MP Carla Lockhart said: “This announcement has come as a huge shock to staff and to the wider community. This store is very popular and Craigavon has proven itself to be a strong base for retail.

“Indeed the Rushmere Centre has recently had the news that Primark is taking up the former Debenhams unit and this will drive footfall even more.

“While there is lead in time to closure obviously this is a difficult time for staff. I trust that support can be provided to them to secure alternative employment and anyone needing guidance can contact me for signposting to support.”

High unemployment

SDLP Upper Bann MLA Dolores Kelly has said the closure of the Sainsbury’s store at Rushmere Shopping Centre in Craigavon is a huge jobs blow for the area.

The Upper Bann MLA said: “This announcement is devastating news for staff and shoppers in this area who frequent this store. For 109 staff to potentially lose their jobs in the run-up to Christmas is a huge jobs blow. This area has long suffered from a chronic lack of investment and this is evidenced by the already high unemployment locally and this news will only make things worse.

“This closure will also leave this huge store empty, while I hope it will be filled by another shop as soon as possible there are only a limited number of companies capable of taking on this huge space. This is the latest in a long line of business closures in this area and we need to see an Executive strategy to revitalise this town and the many other towns across the North that find themselves in the same position.

“Questions have also been raised about what led to this decision with Sainsbury’s making large pre-tax profits last year, with many local people relying on this store during the coronavirus lockdown. My office will be liaising with the staff affected to see what assistance can be offered and I hope that they secure alternative employment soon.”

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