Profiteering?

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  • ASK1945
    Participant

    Across several threads there have been several references to firms “profiting” or not “doing the right thing” during this current worldwide emergency.

    I live near the A1 in North London, which is one of the main arteries out of London to the North, via the M1 and A1(M). My local garage, which is tucked away on a lesser main road about 400 metres from the A1, and is not one of the big brands, although it’s a bright modern petrol station with a mini-shop and coffee bar, and is open 24 hours a day. They have been selling Petrol at £1.027 for about 10 days now. I know the owner and he told me that with the mega drop in the wholesale fuel price, he can make a reasonable profit at that level. Indeed, today we learnt that some supermarkets have even dropped their prices to under £1, yet they don’t need a “loss leader” at the moment.

    On my daily walk today I passed three other petrol stations, belonging to Shell, BP and Esso – all on the A1 leading to the two motorways. Their prices for petrol varied between £1.22 and £1.24.

    What do you think?


    AJDC
    Participant

    It is not profiteering.Like many other products, you have a choice of either purchasing or not. It’s like airline tickets. LAX to SYD on Qantas in business is priced at U$15,000. I look at that and think that’s highway robbery. Other carriers’ are priced at U$5,000, which I also think is highway robbery. I have the choice of purchasing or not. I choose not.

    The market will determine how much sales are captured…

    2 users thanked author for this post.

    Inquisitive
    Participant

    Most of those who buy petrol from Shell, BP and ESSO, have respective companies affinity/credit cards. And those offer additional discount anywhere between 10-20% plus some other points accumulation. So overall the cost of petrol per litre is about the same as other independent companies.

    Another point: although quality is almost same for a particular grade of petrol, each company’s blending and additives have minor differences. So it is better to continue with one producing vendor. The independent vendor buy from many sources.


    alanred13
    Participant

    The UK PM said in one of his briefings that he didn’t want companies or individuals to profiteer from the Covid19 pandemic, so I’m not sure normal supply and demand rules apply at the moment.

    We airfreight US to UK regularly and our freight forwarder has had to put a surcharge on all shipments which works out at between 70%-110% increase in costs depending on where we’re flying from. All our cargo comes on passenger flights but I’m told by the freight forwarder that the major airlines that fly between USA and LHR have raised rates substantially. Maybe the government should be looking at these companies who presumably will be looking for a bail-out soon.


    ASK1945
    Participant

    Inquisitive – my local petrol station gets it fuel from one source. I do not believe that the quality is any different. As for business use, with all its discounts, it’s the personal users who will suffer the most.

    alanred13 – you are absolutely correct about supply and demand. Clearly AJDC the market does normally determine policy. However, when supply is down and demand has not (as in your case alanred13) the cost does go up. But, in the case of fuel, the supply is up and demand is down (at the moment) so this does not explain why the big companies have not reduced their prices; the cost of the actual fuel has gone down by 50% (tax and duty are a major component) and presumably their costs of production and distribution have reduced also.

    I wonder whether the Competition Authority will look at this in due course, if the prices do not come down.


    ViajeroUK
    Participant

    alanred13, The reduction in numbers of passenger flights operating could explain the increase in freight charges in your case. As ASK1945 says, a simple case of supply/demand in-balance.


    alanred13
    Participant

    The reduction in numbers of passenger flights operating could explain the increase in freight charges in your case. As ASK1945 says, a simple case of supply/demand in-balance.

    You are correct but the fact that you can get a higher price, due to less supply, does not justify doing it in the current circumstances.


    MartynSinclair
    Participant

    @ASK1945 – we appear to share the same local garage (opp the co-op). I too just walked past as part of my daily exercise… :).

    What did infuriate me a couple of weeks ago, the 2 independent pharmacies in ‘our’ High Street going towards the station were selling identical masks. The one opposite the station (DC), were selling for £10 each (£70 for a box of 10), whilst the pharmacy further down (by the zebra crossing) were selling for £1.15 each. I accept in normal circumstances supply and demand sets the price – but these are NOT normal circumstances.

    1 user thanked author for this post.

    ASK1945
    Participant

    @ASK1945 – we appear to share the same local garage (opp the co-op). I too just walked past as part of my daily exercise… :).

    What did infuriate me a couple of weeks ago, the 2 independent pharmacies in ‘our’ High Street going towards the station were selling identical masks. The one opposite the station (DC), were selling for £10 each (£70 for a box of 10), whilst the pharmacy further down (by the zebra crossing) were selling for £1.15 each. I accept in normal circumstances supply and demand sets the price – but these are NOT normal circumstances.

    Hi Martyn – yes, we are talking about the same garage. We might have even walked two metres away from each other, as i passed it again this afternoon. !!

    The two chemists you refer to are actually not so near to me, so I can’t comment on that from personal knowledge. However, I think we all know that some local businesses of various kinds have been taking advantage of the situation and definitely have been profiteering. But they will reap the rewards of their outrageous actions when supplies return to normality in due course.

    I touched on my real concern about this topic I intorduced when I wrote later “I wonder whether the Competition Authority will look at this in due course, if the prices do not come down”. AJDC wrote “I have the choice of purchasing or not. I choose not.” That only works when there is a true market and no collusion.


    SimonS1
    Participant

    Hard to tell really, there are so many variables.

    1. When the tanks were filled, given sharp price falls over last week.

    2. Much reduced demand as people stay in. But staff etc still have to be paid.

    3. Prices always higher on major routes (A1), it has been like that since ever.

    Undoubtedly there is some opportunistic behaviour, but fuel retailing is one of the most competitive markets there is.


    ASK1945
    Participant

    SimonS1

    Hard to tell really, there are so many variables.

    1. When the tanks were filled, given sharp price falls over last week.

    Martyn Sinclair’s and my local garage has been selling at £1.027 for at least two weeks. The wholesale price of fuel has been dropping to levels not heard of for years, for over a month. The big guns have not dropped their prices by anything like this wholesale price drop.

    2. Much reduced demand as people stay in. But staff etc still have to be paid.

    That is the case with the local garage, also

    3. Prices always higher on major routes (A1), it has been like that since ever.

    Agreed. But the differential has not been so great in my memory.

    Undoubtedly there is some opportunistic behaviour, but fuel retailing is one of the most competitive markets there is.

    That only works when there is a true market and no collusion.


    esselle
    Participant

    There was until quite recently a petrol station on the A1 as you came down the Holloway Road from Archway that was always priced 20-25p a litre above the going rate. It’s been demolished and turned into (student I think) flats. A couple of hundred yards further on there was another garage selling at about market rate.

    I don’t get the profiteering argument here; businesses will charge what they think they can. It’s why petrol is always far more expensive on motorways.

    2 users thanked author for this post.

    Guesswho100
    Participant

    This is not in-keeping with posts about petrol prices but it is in-keeping with profiteering. Recently wife and I were in the USA when the US Govt announced flights from the UK to the USA would cease at midnight on Monday March 16. We were due to return to the UK on March 18 so I tried to re-book our return journey . Despite many hours of trying, I could not get through to British Airways EC so I was left with little choice but to use the ‘Manage My Booking’ function (LAX-LHR, booked in First, Gold card EC) – I was able to change the date of my return but at a cost of £17,000.00 ! Instead I booked 2 single flights out of San Diego at a cost of $8000.00. I mentioned this to the CSM on board who wrote to BA EC on my behalf, I got a reply in which the cost of £17,000.00 was justified on the basis that BA has to ensure their routes are profitable. If this is not profiteering, I don’t know what is.

    4 users thanked author for this post.

    LuganoPirate
    Participant

    I’ve always found the majors to be more expensive than the independent petrol stations. Perhaps if you are a business with a fuel card the cost may well equal out, but for an individual it’s a different matter.

    As to the quality, a friend who worked for BP told me all retailers take from the same storage tanks. The tank may have BP on it but it was not necessarily BP that provided and refined the crude.

    1 user thanked author for this post.

    SimonS1
    Participant

    s to the quality, a friend who worked for BP told me all retailers take from the same storage tanks. The tank may have BP on it but it was not necessarily BP that provided and refined the crude.

    The basic story is right, as the base fuel from the refiners is the same.

    The fuel that goes into your car is not the same, as the additives may be different. Plus the levels of bio diesel may also be different causing performance variances and different levels of wear and tear.

    Is All Petrol & Diesel The Same?

    There is a reason why taxi drivers (who have every reason to manage their costs) will generally tell you they fill up at Shell and BP and not at the supermarket.

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