This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
20 December 2012: A study commissioned to assess the state of the retail fuel market .
Press Notice 2012/069
A report has found that significant changes to the retail market for road fuels, including the increasing dominance of supermarket forecourts, have not had an impact on the availability of petrol and diesel for motorists.
The Deloitte study, commissioned by the Department of Energy and Climate Change, shows that overall the number of forecourts in the UK has declined by six per cent in the past five years. This follows a trend of closures seen in the past 40 years from a peak of more than 37,500 in 1970, to less than 9,000 in 2011.
Primarily these closures have been of independently owned and operated petrol stations, with the supermarkets enjoying an increasingly dominant share of the market.
Deloitte found the vast majority of motorists (92 per cent of postcode areas) have more than two petrol stations 10 minutes drive away and the remainder have an average 13 minute drive to a forecourt. Average increases in driving times across the whole of the UK have been less than a minute as a result of market changes in the past ten years.
In the event of a total disruption to petrol and diesel supplies the retail sector holds up to eight days of fuel capacity to meet current demand, the report concluded.
Energy Minister John Hayes expanded the report to include consideration of the number of petrol stations available to people and the distance travelled to reach them, and how this has changed over time.
Energy Minister John Hayes said:
“This report was commissioned by my Department to get an accurate picture of the retail fuel market and to consider any possible implications for our security of supply. I expanded its brief to consider the important issue of fuel deserts in rural areas.
“Although it is very clear there has been a market shift from independent to supermarket forecourts in the past 40 years this has not had an impact on the vast majority of motorists.
“The report has also found the UK retail sector has more than enough capacity to meet fuel supply shocks before contingency measures are put in place.
“This Government has taken significant action to support retailers and motorists. We have effectively frozen fuel duty for 2 ½ years, easing the burden on motorists by £19bn over the parliament to 2015/16.
“Postponing the revaluation review has prevented significant business rate hikes for forecourts and the burden of high pump prices on extremely remote islands has been reduced with our Rural Fuel Duty rebate scheme.”
“My officials will be working with industry, trade associations and other government departments to ensure motorist always have a ready and secure supply of fuel. This report will help inform our further work here, as will the findings of OFT’s Call for Information into this sector, due in January 2013.”
In 2011, supermarkets had a market share of 39% in total fuel volumes sold while share of the number of petrol filling stations was only 15%;
There were 434 supermarket sites selling petrol at the end of 1990 in the UK, by 1995 there were 776 sites and 1,063 sites by 2001;
During 2004-12 the total number of petrol stations has declined by 20%. The number of pumps has only declined by 11%. This is in part due to the increase in overall numbers of supermarket sites which tend to have more pumps per site;
Total number of vehicles registered has risen from just under 27 million in 1997, to over 34.6 million in 2011;
Overall retail volumes of fuel increased from 28 million tonnes in 1997 to a peak of 29.3 million tonnes in 2007. In 2011, volumes fell back to under 27 million tonnes, a decrease of just under 8% in total over the past four years;
The estimated value of the petrol and diesel market was £47billion in 2011;
Petrol demand in 2011 was just below 1970 levels, and in the same period diesel demand has increased fourfold. In 2011 68% of vehicles registered were petrol, with 31% of vehicles registered diesel, compared to 89% and 11% respectively in 1997;
Share of transport in total demand for petroleum products has increased from 61% in 1998 to 70% in 2011. Road transport accounts for 72% of total transport demand;
Volumes of petrol and diesel supplied in the UK have been in the range of 38 million tonnes to 39 million tonnes over the last 15 years;
More than 92% of all UK postcode areas have more than two petrol stations within a 10 minute drive, the remainder have an average of 13 minute drive;
In the event of a total disruption to petrol and diesel supplies the retail sector holds up to eight days of fuel capacity to meet current demand;
Notes for editors
DECC commissioned this report from Deloitte LP in order to develop a detailed factual picture of the petroleum retailing sector in the UK to identify and analyse the key business drivers influencing development across the sector, consider the changing shape of the retail fuel market in the UK and to consider whether such changes have implications for resilience of retail fuel supplies to public, and/ or in the longer term, have security of supply related impacts. A copy of the report can be found on the DECC website.
The OFT issued a separate Call for Information on the UK petrol and diesel sector in September 2012; with the objective of assessing a number of claims including
- whether reductions in the price of crude oil are being reflected in falling pump prices
- whether supermarkets’ and major oil companies’ practices may be making it more difficult for independent retailers to compete with them
- whether there is a lack of competition between fuel retailers in some remote communities in the UK, and
- whether concerns about price co-ordination and the structure of road fuels markets identified by other national competition authorities are relevant in the UK.
Key differences between the two reports are that the Deloitte report does not look at competition, or the price paid for fuel as it is more appropriate for the OFT to consider this.
Instead the Deloitte report concentrates on the number of petrol stations available in the UK, how access to petrol stations has changed over this period, and the trends seen over the last decades and the implications of these on the UK’s energy resilience. Energy Minister John Hayes widened the scope of the report to also consider peoples proximity petrol stations and the number available to them, and how this has changed.
Information about the postponement of the Government’s business rate revaluation visit.
For more information about Rural Fuel Duty rebate scheme visit the HMRCwebsite.