Petrol stations in rural areas struggle as low demand combines with tumbling oil prices

The Petrol Retailers Association (PRA) have warned that the number of rural and independent garages forced to close during the Coronavirus pandemic could go from 100 to 1000 in the coming weeks.

The number has doubled from the 50 members who had already been forced to close by the beginning of April and the continued decline in demand combined with price pressure from tumbling oil prices is taking its toll.

Fuel stations are on the list of businesses the Government has allowed to stay open during lockdown but, as much of the population follows advice to stay at home, demand for petrol has dropped by 75%.

“To help freight move and help key workers travel safely and independently through this period of crisis, petrol filling stations must remain open, but this is proving to be a challenge for many filling stations,” said Brian Madderson, Chairman of the PRA.

The PRA have over 5500 independent members ranging from large groups like Motor Fuel Group (MFG) or Euro Garages to single site family businesses. Some rural members have reported 80%-85% drops in demand.

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Madderson continued, “There is speculation from some motoring organisations and lobby groups that UK fuel prices will tumble fast as a result of the historic event in North America, when the value of oil moved into negative territory.”

One rural fuel station in Somerset, Manor Garage, is owned and run by Brian Summers who told BBC Radio Somerset: “Although fuel sales are down and it’s difficult business wise it means that people are listening to the Government and not moving around, which can only be good.

“Rural filling stations and garages are sort of in a unique position in this lockdown period because we’re considered an essential service for nurses, carers, people who have to move around but having much less business means lower sales and lower income.

“Lots of shops, cafés, pubs and things have closed down so they don’t have their running costs and some others like chemists and grocery stores are considered vital but they’re getting more custom. Garages are open, so they’ve got their running costs and they’ve got 70-80% less income.”

Brian Madderson has written to the Chancellor on behalf of his members to ask that the Government do more to help these businesses. Although they qualify for the SME grant of £25,000, that doesn’t cover the tax on a single fuel tanker delivery.

These filling stations are now left trying to sell tanks of fuel bought before the price of oil plummeted, leaving them helpless to fight supermarket prices bolstered by grocery demand.

He added: “Fuel retailers are having to maintain pump prices at previous levels to avoid suffering significant stock losses. When the Covid-19 restrictions are lifted and high sales volumes return, then we expect to see reductions in retail fuel prices.”

The PRA want the Government to step in and make fuel suppliers match the 60-day payment terms they offer supermarkets to help to ease the pain. But in the meantime, it is recommended that customers in rural locations call ahead before visiting their local fuel station to make sure it is still open.