Changing Competition in British Petrol Distribution: A Case Study

As contrasted with the situation in the United States, most sites in Britain were individually owned by the operators and were “mixed,” that is, they offered the products of more than one company. However, approximately one-third of all retailers did take their total requirements from a single company, as a matter of individual preference or because they had only one or two pumps, and thus physically could not handle more than one brand.

See Bolam (H. M. Inspector of Taxes) vs. Regent Oil Co., Ltd. Tax Cases Reported under the Direction of the Board of Inland Revenue, Vol. 37, Part I, 1957, p. 59. Members of the trade report that Esso was also threatened with vigorous retaliation if the company persisted in its efforts to introduce “solus” arrangements.

Motor Trade Executive, June 1960, p. 19.

Garage and Motor Agent, Jan. 23, 1960, p. 1196.

Financial Times, Jan. 20, 1960.

Regent's representative had advised a Regent dealer to get together with others in a local pub and arrange for all to increase prices simultaneously. Garage and Motor Agent, Jan. 30, 1960, p. 1221.

Motor Trade Executive, July 1960, p. 16.

Four grades of petrol were sold at this time: The highest or “Super” grade had an octane rating of 100–101; “Premier” (96–97 octane); “Mixture” (93–94 octane); and “Standard” (85–85 octane).

The entry of “outsiders” into the distribution of petrol was not unique. As early as 1962 brewers had begun developing sites adjacent to public houses. These generally sold major petrol brands, although some Watney sites sold under the “Swift” name. The Rank Organization, Ltd., owning theatres, bowling alleys, and dance halls, also has erected petrol facilities in parking lots adjacent to its properties. Rank and the Granada Group, Ltd. (owner of a movie chain and television interests) also have developed some service areas on motorways where oil companies are prevented from bidding by the requirement that each site must have four competing brands.

Total Oil Products (G.B.) Ltd. is one of approximately seventy subsidiaries of the Compagnie Francaise des Petroles Group. The French government owns 35 per cent of the share capital.

E.N.I. is Italy's state-owned oil and gas monopoly which grew rapidly in Europe under the direction of Enrico Mattei.

This was the same percentage which British Petrol Co., Ltd., Shell, and Esso had attained in Italy. This goal is partly explained in terms of the dislike of Mattei for these companies. See Votaw Dow , The Six-Legged Dog, Mattei, and E.N.I.–A Study in Power (Berkeley and Los Angeles: University of California Press, 1964), pp. 128–129; in this work, Dow Votaw contends that Mattei chose to enter the United Kingdom not only because of the attractive price level, but also to combat these three favorite enemies. The enmity had been caused when the larger oil companies had prevented E.N.I.'s participation in an international consortium formed in 1954 to refine and market Iranian crude oil.

Interview reported in Oilgram (Nov. 8, 1961).

Jet also offered a product equivalent to the majors' Mixture grades, priced 3d. below the prices of the majors. Subsequently, in November, Jet also introduced a Standard grade (Jet “Thrift”) at a price 4d. below the majors.

Esso's annual report is a valuable reference since this is the only company with a large share of the market which issues a report covering operations in the United Kingdom alone.

Esso may be in a better position than some of its rivals, for by 1965 it was obtaining crude supplies from Libyan oil fields. This means a shorter tanker route, by a half, than the crude coming from the Persian sources of others.

An unexpected addition to the supplies available to independent distributors came in early 1965 when Imperial Chemical Industries announced that they were supplying some high-octane petrol to a handful of independents in the northeast. I.C.I. refines crude oil to obtain naphtha, and high-octane petrol is essentially a byproduct of this process.