UK in line for demand-driven fuel pricing
06 June 2017
Author: Daniel Puddicombe
Fleets could be hit with higher fuel prices at busy times under plans that may be put into place by fuel retailers and supermarkets within months.
Software capable of changing the price of fuel based on demand at the pumps "is ready to go", according to Martin McTague, director of a3c, the company selling the algorithms.
Speaking to BusinessCar, he said his firm "is in advanced discussions with supermarkets and other large retailers" about bringing the software to the UK.
Originally reported by the Daily Telegraph, similar software is already used in Germany and America, where fuel prices can bounce up and down anywhere between four and 10 times a day.
"The technology is working - there's nothing unique about UK fuel pumps," he added, although he declined to comment on which brands he is having conversations with at this stage. McTague, who is also a director at the Federation of Small Businesses, told BusinessCar the software will be capable of changing the pump price of fuel by up to 2p a litre depending on demand.
For instance, on a sunny bank holiday, where demand for fuel is likely to increase, prices will rise accordingly, while there could be a cut in the cost of refuelling during the night.
Drivers will not be given any notice about when the price of fuel could change. It is likely fuel prices will be higher during the working day, and they could theoretically fluctuate every hour.
Supermarkets could also use the software to slash the price of petrol and diesel as a tactic to encourage people to shop in their stores. Howard Cox, founder of the FairFuel UK campaign, slammed the technology, telling BusinessCar that drivers "will be easy pickings to be gutlessly exploited at will" by fuel retailers.
But McTague claimed the innovation could save fleets thousands of pounds a year on their fuel bills, and said motorists would start to buy fuel in the same way they choose flights. "It will be like using discount airlines whereby people will start to search for the cheapest time of the day to buy fuel."
Cox added: "The introduction of artificial intelligence software that ignores changing oil prices to hike prices based solely on demand is truly a disgusting and worrying development."
The campaigner has also urged the next Government to introduce a pricing regulatory body "to stop the perennial opportunistic profiteering by greedy oil companies and their wholesalers fleecing 37 million drivers".
McTague, however, said there's no deception with the software. "The price you pay at the pumps will be what it says. Up until now, fuel pricing has been very conservative in the UK, with prices moving once a week, mainly brought about by one retailer dropping prices and everyone else following suit."
Stuart Thomas, head of fleet services at the AA, echoed Cox's sentiment and disagreed that the technology could help to save fleets money in the future: "A lot of company car drivers not only drive at peak times but also typically cover a lot of miles, so any increase in fuel cost is going to have a significant impact. Companies utilising technology to exploit price movements entirely for profit would hit drivers and businesses unfairly."
However, Paul Hollick, managing director of mileage and expense management company, TMC, told BusinessCar there are larger problems than a fluctuating fuel price: "While people focus on the price of fuel, what really matters, especially for fleets, is volume.
A penny or two per litre only adds to 50p or £1 on a fill-up, which is minuscule compared to the impact of exaggerated mileage claims and excessive fuel consumption. Those are both problems fleet managers can tackle very successfully using consolidated real-world fuel and mileage information."
Hollick, who is also chair of the Institute of Car Fleet Management, added: "Some motorists will end up paying more but drivers will work out when petrol stations are likely to be at their busiest and avoid those times. And since low-cost fuel is a key part of supermarkets' marketing, in reality we're likely to see their fuel prices moving in a limited range."