Outlook: Danger signs on the forecourts

On the change in Pearson's strategic thinking, the passing of Christie's into french hands, and the oft's latest look at the petrol market;
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The Independent Online
IT WOULD only have taken John Bridgeman a short drive up the M1 to discover that petrol retailing is not as competitive as he likes to think. In the motorway service stations, where the oil majors do not have those tiresome supermarkets snapping at their heels, they charge their captive market what they reckon they can get away with - which on most motorways is about 5p more a litre than in town.

The OFT's latest examination of the petrol market - the fourth such inquiry in the last 25 years - conveniently airbrushes over this awkward statistic. It prefers instead to concentrate on the way competition between the oil majors and the supermarket brands has brought prices tumbling down in urban areas.

Unfortunately, the arrival of the supermarket giants led by Tesco has also brought the number of independent retailers tumbling down since they cannot live with the low (please don't call them predatory) prices. If you happen to live in the north-west of Scotland, this retail revolution on the forecourts will have passed you by completely, of course, as one more independent station after another gives up the ghost. Never mind, there is always the scenery to compensate.

There are not many motorists who don't think the petrol market is fixed. This is partly because it is the ultimate distress purchase and partly because more than half the market is still in the hands of just three players - Esso, Shell and BP/Mobil - whose prices rarely vary for more than a few days. This is either competition or collusion at work. But if the OFT is so sure it is the former, why has the petrol industry now been subject to no less than four separate inquiries?

The latest one has cleared the supermarkets of predatory pricing - even though the OFT agrees they sold petrol at a loss and now there are 5,000 fewer independent retailers. On balance, the motorist has probably gained more than he has lost through the arrival of the supermarkets on the forecourts. But with nearly 80 per cent of the market now in just eight pairs of hands, and gross margins in petrol retailing a miserable 3p per litre, the temptation to stop competing and start ratcheting prices up must be immense. Stand by for investigation number five but don't expect too much.

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