New fuel price signs were switched on along the M5 motorway this week, as part of a new government trial to improve petrol price transparency.

Users of the motorway can now use the roadside displays to see the price of fuel at five service stations, without having to leave the motorway. Andrew Jones, the Road Minister, hopes that this will “make it easier (for motorists) to plan their breaks around the cheapest deals.”

The service stations taking part in the scheme are located in Gordano, Sedgemoor Bridgwater, Taunton Deane and Exeter.

Fuel Price Signs – The History

This trial of fuel price signs is a government initiative being funded by The Treasury. It’s being implemented by Highways England on the government’s behalf.

The idea of trialling fuel price signs came up following an OFT study on petrol and diesel prices in 2013. One of the main reasons for the study was to investigate the realities behind the widely-believed “rocket and feather” theory (where fuel prices “rise like a rocket and fall like a feather” in response to oil price changes).

Despite some disappointment from drivers and motoring groups, the OFT study concluded that the fuel market was sufficiently competitive. However, one detail the survey did acknowledge was the heavy disparity between prices within towns, and those at motorway service areas.

It’s undeniable that certain factors can lead to fuel being more expensive at motorway services, including staffing costs and other expenses relating to 24/7 opening. However, fuel at services is often so much more expensive than elsewhere that it’s hard not to assume that these establishments are capitalising on their “captive audience.” That’s certainly the perception of plenty of motorists.

The idea of motorway fuel price signs is to erode this “captive audience” perception, by allowing drivers to make a buying decision before actually leaving the motorway. Hopefully, the eventual outcome of this will also be cheaper and more competitive prices at these service stations.

Fuel Price Signs – The Details

I was pleased to be able to have a discussion with Antony Atkins from Highways England and find out more detail about the new trial scheme. As mentioned above, Highways England are managing this scheme on behalf of the government.

Initially, the trial will last for 18 months. It will then be for the government to decide whether to extend it across the nation’s motorway network. Its success will be measured on four key criteria:

  1. Whether safety is maintained for road users and road workers alike.
  2. Whether customers (road users) find the system useful.
  3. Whether increased transparency results in more competition between the participating stations.
  4. How well the technology works, particularly with regard to keeping the signs updated in real-time.

The M5 is a key tourist route, taking millions of people to Devon and Cornwall. Highways England hope that the fuel price signs will provide a useful service for these people, many of whom are unfamiliar with the areas they are passing through. These drivers are therefore less likely to want to leave the motorway to source fuel elsewhere.

This led on to a question we were keen to find out the answer to – whether the scheme could be extended to point people away from the motorway to cheaper “off network” garages. This isn’t within the scope of the trial, as this initiative is about increasing price transparency specifically for motorway services – off the back of the OFT report referred to earlier.

Will the Fuel Price Signs Work for Customers?

Taking a slightly cynical view, it seems probable that there are two likely outcomes following the launch of these signs:

  1. Their existence will really stimulate competition, resulting in a price war between the garages which will be great news for motorists.
  2. The garages will align their prices so closely that benefits to the motorist will be eroded.

Putting that cynicism aside, we do actually have some evidence that goes beyond supposition, because fuel price signs are already in place in some other European countries, including Italy and Portugal. According to a detailed Bocconi University study, the signs in Italy have pushed prices down to the tune of €0.01 per litre. The corresponding effect on the M5 will be revealed in time, but the 18-month trial period should give the new system plenty of time to settle.

Obviously at PetrolPrices.com, we welcome any move that will improve fuel price transparency. It is a shame that this initiative doesn’t also take into account forecourts away from the motorway, but it’s fair to say the other countries’ schemes don’t do this either. Fortunately, you have our free service to bridge that gap!

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