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Trade body slams government for fuel policy

Fuel pricesBrian Madderson, Chairman of the trade body for petrol retailers, RMI Petrol, has slammed the government for it's handling of the recent dispute with trade unions representing tanker drivers.

In a statement to Motor Trade News, Madderson said, "The first test for the Government's Energy Resilience plan has been an embarrassing failure with potentially serious consequences for the economy" said Brian Madderson, RMI Petrol Chairman. When the Government created a fuel crisis and started the "panic buying" spree by motorists and businesses just two weeks ago, it provided an unexpected opportunity to test the UK's Energy Resilience for road fuels for the first time since the infamous blockade in September 2000 brought the country to a near standstill. As a result of the devastating number of forecourt closures, with 6,000 wiped out in a little over twelve years, the remaining filling stations across the UK were virtually emptied within just a few days. Another factor was much lower forecourt stock levels due to ever higher Government taxation and the cost of crude oil on global markets. Fuel "run outs" hit motorists and retailers alike with many being forced to close as stock replenishment took several days to complete. Our Energy Resilience was tested and found wanting.'

Madderson continued by saying, "Fortunately, the National Emergency Plan – Fuel, was not implemented at that time, as a representative sample of independent forecourt operators with Designated Filling Stations (DFS) has suggested the scheme is not "fit-for-purpose". This comment particularly related to the lack of engagement by Local Resilience Forums (LRF) and the administration by the Department for Energy & Climate Change (DECC)."

RMI Petrol are also concerned about the competitive landscape for fuel retailers, citing the 1998 Office of Fair Trading (OFT) report looking at the market for petrol and cleared the aggressive pricing tactics of supermarkets as being in the consumer's interest. Their report admitted that such a finding might force closure of independent sites and severely impact rural communities, who would have to drive further to fill up. Government did nothing to temper this controversial report. With another 400 filling stations closing in 2011 (Energy Institute), the trend continues and will continue until such time as Government takes decisive action to protect the UK's refuelling network.

The trade body submitted evidence from independent forecourts to the OFT in mid-February and requested that a new Market Study be initiated under the Enterprise Act 2002. An announcement is expected shortly.

Against this backdrop, Madderson has welcomed the news last week that the Federal Cartel Office (FCO) in Germany is to open an investigation into the activities of the main petroleum companies in their retail fuels market. The FCO believe five companies supplying two thirds of the market constitute an oligopoly. The same five companies operate in the UK market. The concern in Germany, as in the UK, follows complaints that the independent filling stations are charged higher wholesale prices than the oil companies' retail prices on their own filling stations – thus leaving them vulnerable to predatory sales tactics.

Talking about the FCO investigation, Madderson said "There are also serious concerns in the German market about below cost selling of petrol. This is one of the complaints levelled at UK supermarkets by our members in the submission to the OFT. The findings of both the FCO and the OFT are awaited with renewed interest. This is an opportunity for Government to learn from the mistakes of the recent 'panic buying' spree and take decisive action that will shore up the Energy Resilience of our retail road transport fuels for the future."