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Merril Boulton: Hang on to your hats
Published:  19 November, 2014

It's like someone has dug a big hole, and fuel prices are falling into it at great speed. It's actually quite weird seeing a price pole displaying figures of say, 122.9ppl for unleaded and 126.9ppl for diesel. They look more like museum pieces so long has it been since prices have been anywhere near that low.

But how long will the situation continue and what effect will it have on the market? No one is making big statements about how long. But since the current state of affairs seems to be largely about oversupply a barrel of oil has slumped to $85 from $115 in a few months a lot hangs on this month's meeting of Opec, although its secretary general has reportedly said oil production is unlikely to change much in 2015. In terms of the UK market, it's probably done the supermarkets no harm in continuing to push the perception to motorists that their fuel prices are always the cheapest. We've lost count of the rather 'samey' stories we've done in recent weeks announcing that first one supermarket has dropped its prices, then all the others have followed. But will it have actually done their sales figures any good? If recent results (Sainsburys) are anything to go by, probably not. The supermarkets fight against each other like dinosaurs, as PRA chairman Brian Madderson so aptly put it (did you see the story on our website complete with dinosaur pic?) and will probably end up no better off. But the effect of their fighting causes no end of disruption to the flow of business to neighbouring dealer sites who don't have the means to maintain a high profile on such matters (and would prefer that motorists are not continually being reminded about fuel prices, but would focus on their amazing facilities and services). Trouble is, dealers can't afford not to cut prices to some extent, because they risk losing the volume, and maybe even the trade in the long term, as customers change their habits. Once the volume is gone, it's really hard to get back. Hang on to your hats!