Farewell to forecourts: fewer than 10,000 British petrol stations are left

Independent retailers rage at the power of supermarkets as closures take outlets to lowest number since 1912
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The Independent Online

The number of petrol stations in the UK has fallen to its lowest level since 1912, official figures out next month will show.

An estimated 600 outlets closed last year, bringing the number below the 10,000 mark, despite petrol prices soaring to record levels. At their peak, in 1974, there were an estimated 74,000 petrol stations.

Numbers have been in steady decline since out-of-town super- markets entered the sector, offering cheap petrol to encourage drivers to shop there.

Motorists also prefer to fill up at larger petrol stations, which have convenience stores selling fresh foods. Meanwhile, improved engine efficiency means fuel demand has barely risen.

Independent petrol stations have borne the brunt, accounting for around two-thirds of last year's closures.

Ray Holloway, the director of the Petrol Retailers Association, has called on the Government to ban supermarkets from selling petrol at below cost.

The Office of Fair Trading will soon decide on whether to refer the supermarket sector to the Competition Commission after complaints that they they are too dominant. A spokeswoman for the OFT said that the sale of petrol by super- markets could be one of the issues being examined, but declined to comment further.

Typically, petrol stations will add 5p profit to the cost of supplying a litre of fuel. But independent retailers complain that supermarkets can afford to supply petrol at cost, or even make a loss. "This is not fair competition," said Mr Holloway. "Supermarkets should not be allowed to make a loss on petrol."

Motorists are also having to drive further to reach their nearest petrol station. Mr Holloway added that, in rural areas, the average distance between stations is seven miles.

A spokeswoman for Tesco, Britain's largest supermarket chain, did not say whether it ever sold petrol as a loss leader. "Since entering the petrol market, we have worked hard to bring prices down for our customers," she said. "We are able to do this because of the large volumes of fuel we sell and the efficiency savings we have made in our supply chain."

The Energy Institute, a trade association which compiles figures every year on the country's petrol stations, found that just 10,371 remained at the end of 2004. Of those, around 6,500 were independent retailers, 1,100 supermarkets and the rest belonged to oil giants such as Shell (or operated under their franchises), the most recent statistics showed.

Supermarkets now account for more than 30 per cent of petrol sales, their share having increased from just 11 per cent of the market in 1992, according to the the UK Petroleum Industry Association (UKPIA), which represents the downstream interests of oil companies. The amount of fuel sold to motorists overall has only grown by 2 per cent since 1991.

The UKPIA said that while the rate of station closures would slow in the next few years, "fierce competition in the retail market is unlikely to abate. So continued consolidation or even withdrawal from the market is likely."

A spokeswoman for the Department of Trade and Industry pointed out it was not against the law to sell products at below cost. "Price setting is a commercial matter for individual companies. Fair and open competition between fuel suppliers means customers should be able to buy petrol at the lowest available price."

In 2001, Britain's largest independent petrol retailer, Save Group, was forced into administration. The company, which had run up more than £100m of debts, blamed fierce competition between the major oil suppliers and the supermarket chains for its collapse.

Many petrol stations are being bought by property developers, which have been encouraged to build on brownfield sites, particularly in urban areas.