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Ringing the changes

03 May, 2011
As the Federation of Petroleum Suppliers holds its annual Expo in Harrogate, amy lanning catches up with its new chief executive and president
Page 21 

The Federation of Petroleum Suppliers (FPS) has inaugurated Gleaner Oils' managing director, David Todd, as president just as Mark Askew takes up his position as the association's new chief executive.

Fuel distributor Gleaner supplies 64 independent forecourts in Scotland, as well as operating nine company-owned sites. The new president said: "It is an exciting and challenging time for FPS. One of the main challenges ahead for all our members is the ever-changing dynamics which distributors face in securing supplies of fuel this varies geographically and seasonally and, with the changes in refinery and terminal ownerships, these issues look set to continue."

Gleaner primarily operates in remote parts of Scotland where many businesses have suffered as a result of supermarket openings. "The supermarkets have made quite a big impact springing up in places where you might question why they are there," says Todd. "The future of smaller sites is about having a broad business with fuel being one part of the package. A strong shop is important, whether that's the owner of the filling station having a good knowledge of retail or linking up with a symbol group to allow them to compete."

Pressure on smaller sites

As fuel prices continue to rise, Todd says the pressure on smaller sites is growing. "People have to understand that smaller sites' cost structure is similar whether they have two pumps or 10.

"Staff are the biggest cost and people have to be wary that too much legislation doesn't go on smaller filling stations because they don't have the cash to spend on modifications. Remote sites provide a service to the community and should be seen as a service rather than just a business."

Gleaner's number of company-owned sites has already dwindled over the past year because of new supermarkets opening up. Its forecourts in Tain in the Highlands and Banchory in Aberdeenshire have both closed.

"The Tain site had been around for 90 years but a large supermarket opened at one end of town and another is being built at the other end," explains Todd.

He believes more independent filling stations will shut in Scotland, but is keen to see the results from the Scottish government's consultation into filling stations. "The government is looking at having a strategic level of filling stations left so the country has appropriate coverage." He is also awaiting the outcome of the UK government's plans to introduce a pilot scheme that will deliver a maximum of 5ppl duty discount on petrol and diesel in the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly. "People in major conurbations don't realise how dependent people are on cars in rural locations," says Todd. "The rural rebate scheme is a very positive idea and we will be very interested when the details are available."

Todd believes that as the major oil companies move away from remoter areas, more opportunities for smaller distributors like Gleaner will open up. "I like to think we can offer a very good support package for smaller filling stations. We are a local company and there to support local businesses. We have more flexible contracts and try to build relationships with retailers. We can deliver just 5,000 litres of fuel if that is what is required, unlike large oil companies. That helps with the cash flow because if prices continue to go up, there will be more pressure on smaller sites.

"We have a close relationship with Shell so our sites can accept Shell fuel cards," adds Todd. "That benefits Shell because it gives them a network in rural locations and it benefits the filling station because, as the majors pull out, we can still offer a major's fuel card."

Todd says that rural sites are also suffering more during harsher winters. "When some filling stations near large cities were running short of fuel it was likely that a few miles down the road there was another filling station with plenty of fuel. In remote areas, if the site runs out of fuel, there is nothing down the road. This highlights the service filling stations are providing to the community. That gets forgotten at times when price becomes the issue. Smaller sites need to be prioritised."

FPS focus

Taking over from Susan Hancock as chief executive of the FPS is Mark Askew. He says a key focus of the association will be tackling legislation coming out of Europe.

"Our job is to try and make sure the distribution network remains viable and that means we need a range of distributors large and small. We have to be more proactive in Europe. The FPS has done a lot of work in Europe to date but there is more to do because of the sheer wealth of legislation. We need to deal with it on a European level, as well as interface with the UK government to make sure that when the legislation comes in it doesn't get gold plated."

One issue that the FPS is paying particular attention to is biofuels. "Biofuels are making a simple supply business unnecessarily complicated," says Askew. "All the legislation is doing is making fuel more difficult to supply, difficult to store and difficult to have consistency for apparent alleged fewer greenhouse gases. Even Friends of the Earth has changed its position on biofuels because of the deforestation production causes."

Another focus of the FPS surrounds the Fuel Quality Directive, which sets out targets for the reduction in life cycle greenhouse gas emissions from energy supplied. There is currently a binding target of 6% and the possibility for increasing the future level of ambition to 10%. "The UK is pressing ahead with this but we are saying there are more ways to get those reductions than just putting in more biofuels," says Askew.

Both Askew and David Todd are waiting to see what the future holds for the industry particularly with regard to ownership across the supply chain. "It's very much a changing marketplace," says Askew. "That makes it a very uncertain time. We've had a long period of stability and now it's all becoming fluid."