Any motorist who has had to stop for fuel on the motorway will have experienced the problem that the Government is now looking into, which is the abnormally high cost of fuel at motorway service stations. For many years motorists have complained about them and avoided them as much as possible.
Last week the Transport Secretary, Chris Grayling announced that the Government will be launching an inquiry into the ‘exploitative’ pricing of motorway service stations. If they do find that the pricing is taking advantage of the scarcity of fuel options on motorways then they could follow it up with reforms to how much motorway service station operators can charge for fuel.
Fairer deal for motorists
The announcement came from the secretary this week and accused the big three motorway service station operations: Moto, Welcome Break, and Roadchef for exploiting motorway drivers. He launched an investigation to make sure drivers get a ‘fairer deal’ because motorway forecourts can be up to 19p more than elsewhere.
In response, Roadchef said it was not responsible for setting the prices for petrol and diesel in its stations while Moto said that the price reflected the cost of ‘building and running services.’ It added that many of the forecourts were owned by fuel companies who set prices to reflect the ‘complexities of motorway trading’ such as round the clock opening. They also added that where they do own the forecourt, they make sure they match the fuel company’s price.
The third company mentioned on the list, Welcome Break, have yet to issue a comment on their position regarding motorway fuel prices and their stations, but no doubt they will have a similar set of reasons to explain why pricing is much higher.
Less choice, higher prices
In his letter to Andrea Coscelli, the head of the Competitions and Markets Authority, Mr Grayling, said that he was concerned that these forecourts exploited drivers in the situation where there were less choice and competition. He added that it discouraged motorists from stopping and refuelling, which they need to do for safety reasons.
He requested a view from the CMA (formerly the Office of Fair Trading) as to whether the three companies currently operating the majority of motorway service areas (MSAs) were exercising ‘market power to the detriment of motorists.’
The three companies in question run a total of 112 MSAs around the UK. Industry figures published this week show that the average unleaded petrol price from an MSA is 137.7p while the average price around the UK is 120.11p. The average price at the supermarket is just 116.74p. It would mean filling up the average car would cost around £10 more at a motorway station.
Many motorists would happily tell Mr Grayling this isn’t a new problem and figures show it is one that is getting worse. In 2011, the RAC compiled figures that showed that the prices at the motorway pump were 7.5p higher than elsewhere. Another study in 2013 found prices were ‘significantly’ more expensive in motorway service stations.
The Secretary admitted that he understood that MSAs have higher overheads and infrastructure costs but that the higher prices were not ‘fully explained’ by the companies. Other previous concerns involved not being able to see the price of the fuel until they had left the motorway, or making companies add signs visible from the motorway, which could encourage operators to lower prices to bring more drivers in.
Others are against the idea of regulation and interference in the market. They say that motorists know that it is more expensive to fill up on the motorway and this is why the price signs trial on the M5 had no impact on things. And drivers make their preferences known by not using the services and filling up before they depart. Although that view may be true to regular UK motorway drivers, a visiting driver from the Continent will have no idea of this disparity and will suffer an unfair price difference due to ignorance of this unique UK price differential.
Motoring agencies were quick to offer an enthusiastic response to Mr Grayling’s move. Simon Williams from the RAC welcomed the minister’s intervention and said they had been calling for measures to be taken around the topic for a long time. They believe that there’s nothing to justify the sky-high prices at the motorway pump and the prices mean motorists fill up only the minimum and risk running out of fuel.
Luke Bosdet from The AA said that motorists had been treated like ‘hostages’ by MSAs and that they welcomed any move to deter ‘rip off’ prices at motorway pumps.
And Jason Lloyd, Managing Director of PetrolPrices.com added: “This is great news for motorists if something actually happens this time. MSAs have been very good at being able to argue that the costs of running a motorway service station are much greater and therefore a higher price is needed.
I think the MSAs and the Government need to pull in the same direction. Price transparency and better availability of information about where you can fill up from motorways are more important than operators who choose to have high prices.
At the moment it’s a captive market, if you break the captivity by making it easier for people to see where to get it from off the motorway nearby and the price difference then the normal laws of price competition start to operate.”
Is this Government inquiry and the reform of motorway service station fuel prices long overdue? Should fuel pricing be regulated or do you think allowing market forces to set pricing is the best way? Let us know in the comments below.