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MONIMENT DERV PRICES

6th September 1986
Page 5
Page 5, 6th September 1986 — MONIMENT DERV PRICES
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Which of the following most accurately describes the problem?

• Yet again, the fuel companies have demonstrated their "heads I win, tails you lose" approach to fuel prices. As the cost of crude oil plummeted over the past year the price of dery crept down: as soon as the cnide price showed signs of recovery, the price of dery shot up.

It is difficult for those outside the oil companies to work out whether such a pricing policy is fair or not, and in general we must accept their arguments that they are losing money, simply because we have no firm evidence to the contrary.

Whether or not the sums are correct, and the oil companies justified in applying the rapid increases which have been seen in the past couple of weeks, the method by which they have applied those increases is undoubtedly and indefensibly wrong.

The cost of fuel is a significant part of the running costs of a commercial vehicle; depending on the vehicle's size and usage the fuel cost can be anywhere up to 20% of total running costs and rarely forms less than 10%. For that significant part of vehicle running costs to be impossible to predict because of the cavalier attitudes of the oil companies is at best inconvenient to the haulier — and at worst disastrous.

Over the past nine months the average price of dery on the British market has varied by some 30%, from a peak of 32p/litre to a low of 22.6p/litre. If other costs varied as unpredictably as that no operator would be able to do any sensible forward planning.

The astounding factor in this story is that the oil companies are themselves increasingly customers of, as well as suppliers to, the haulage industry. We can only guess at the reaction of one of these companies were one of its contract tanker operators to turn round and say: "Sorry, our rates will go up 10% from midnight and they might go up again next week, depending on what our competitors do." What is certain is that no haulier — no matter how attractive such a scheme might seem — would dare even contemplate such an unbusinesslike approach to his customers.

Hauliers, like most other people in business, set rates (usually on an annual basis) for the convenience of both themselves and their customers. They are entitled to be treated with the same respect by their suppliers.

What would be wrong with an oil company doing what most international traders do when dealing in foreign currencies — setting a rate to which they work for six months or a year and either absorbing the losses or taking the gains as the real rate fluctuates day by day? If the oil companies would do this for even three months at a time — guaranteeing price stability with only four price changes a year, at predictable times — it would make the lot of the haulier a great deal easier. It would also make life much easier for the oil companies themselves, both in organisation and in customer relations.

Many oil companies have done, and are doing, a great deal for the haulage industry. If only they could shake off their street-trader attitudes and do their pricing responsibly, they might get some deserved recognition for it — and the haulage industry could get on with its business safe from the fear of an unnecessary unknown.

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