Shell chief warns of halving in fuel outlets

The cut-throat battle on Britain's forecourts was underlined yesterday when the head of the second-largest group warned that the number of outlets could be halved to 8,000 over the next few years.

Colin Harvey, managing director of Shell UK Downstream Oil, said the intense pressures facing petrol retailers, particularly from supermarkets, and changing patterns of demand were resulting in a fundamental restructuring of the UK downstream oil industry.

Mr Harvey told the Institute of Petroleum European Retail Conference in Birmingham that overcapacity in the UK industry would result in the closure of many filling stations. "The 38,000 sites in 1965 have already fallen to 16,000. I believe that the rate of closure will accelerate and we may end up with half that number of outlets," he said.

The warning comes in the wake of the national launch by Esso, the market leader, of its Price Watch campaign in January, which was widely credited with intensifying competition. The Esso move, which promised to match competitors' prices within a certain radius of individual filling stations, was in response to the substantial market share, now estimated at around 22 per cent, carved out by supermarkets in recent years.

Shell currently has 1,905 filling stations, just behind Esso, but the main impact of the price war is expected to fall on small, independent retailers who made up around 9,500 of the 16,244 outlets recorded in the UK at the end of last year. James Frost, chairman of Frost Group, one of the biggest chains not owned by the majors, has said as many as 3,000 independent retailers could go out of business this year. The Petrol Retailers Association reckons the total number of outlets could dwindle to 9,000 or 10,000 by the end of the decade.

Mr Harvey echoed Mr Frost's forecast that continuing low profit margins could lead to further moves towards mergers or takeovers. The Shell chairman said this was most likely to affect wholesalers and that there was a possibility that one or more refineries would be closed. Earlier this year, BP unveiled a deal to merge its downstream interests in Europe with those of Mobil.

Mr Harvey said overall fuel demand remained static. Within that, however, petrol sales were falling and diesel sales rising. The rise in demand for diesel could make redundant previous investment by British refiners to meet rising petrol demand, he said. The switch to diesel could force oil groups to launch heavy investment programmes amounting to possibly pounds 3bn over the next 10 years to increase the yield of diesel. But he said "producing more diesel would make it more difficult to meet rising demand for aviation kerosene. So imports are likely to rise, to the detriment of this country's economy."

Mr Harvey warned, however, that nothing should be done to limit market forces. "Nobody owes integrated oil companies a living. They can only succeed by ensuring that each sector of their business can compete with all comers," he said.

Separately, Cullens, the convenience store operator, said it had signed an agreement with Mobil Oil to develop a number of shops on the oil company's forecourts in the next five years.

Sport
sportGareth Bale, Carl Froch and Kelly Gallagher also in the mix for award
News
Japan's Suntory Beverage & Food has bought GlaxoSmithKline's Lucozade and Ribena
news
News
A tongue-eating louse (not the one Mr Poli found)
newsParasitic louse appeared inside unfilleted sea bass
Life and Style
The reindeer pen at the attraction
lifeLaurence Llewelyn-Bowen's 'Magical Journey' and other winter blunderlands
PROMOTED VIDEO
News
ebooksNow available in paperback
News
Tana Ramsay gave evidence in a legal action in which her husband, Gordon, is accusing her father, Christopher Hutcheson, of using a ghost writer machine to “forge” his signature
peopleTana Ramsay said alleged discovery was 'extremely distressing'
Arts and Entertainment
Robin Windsor and Aljaz Skorjanec rehearse their same-sex dance together on Strictly Come Dancing
TV
Money
Anyone over the age of 40 seeking a loan with a standard term of 25 years will be borrowing beyond a normal retirement age of 65, and is liable to find their options restricted
propertyAnd it's even worse if you're 40
Arts and Entertainment
Perhaps longest awaited is the adaptation of Jack Kerouac’s On the Road with Brazil’s Walter Salles directing and Sam Riley, Kristen Stewart and Viggo Mortensen as the Beat-era outsiders
books
Arts and Entertainment
theatreSinger to join cast of his Broadway show after The Last Ship flounders at the box office
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Risk Assurance Manager

Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...

Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

£50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

£30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

Selby Jennings: C++ Developer – Hedge Fund – New York

$80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible