Time-dependent petrol pricing in a Carlow service station may prompt a price revolution, write Kilian Doyleand Paul Cullen
THERE WAS a time when half of all Irish cupboards were filled with tumblers bought with tokens handed out at filling stations. The tradition of dishing out freebies in a bid to maximise trade continues today, with fuel retailers dangling everything from maps to cut-price carwashes in a bid to lure motorists.
But many are finding such promotions are no longer enough to keep their forecourts busy. As consumers tighten their belts, savvy managers are realising what the customer really wants is cheaper fuel.
As a result, many stations keep fuel prices artificially low to entice motorists in the hope they will spend money in their shops, cafes and car washes. Retailers feel it's worth taking a hit of a couple of cent per litre if it means more custom. Margins are so tight there's far more money to be made on a cappuccino and a newspaper than on a few litres of diesel.
One service station in Carlow has adopted an approach to luring in customers so novel that industry watchers predict it may catch on throughout Ireland.
The Maxol station on O'Brien Road drops fuel prices at night and raises them in the morning, meaning motorists who fill their tanks overnight at the 24-hour station can save up to 3 cent per litre by avoiding prices charged during busier periods.
Station manager Valdas Kirelis explains that prices drop each day at 5pm to attract evening traffic, and increase again at 5.30am the following morning.
The exact price drop varies. "It depends how low we can afford to go but we don't sell below cost price. It's the only way to be competitive," he says, adding that the practice of time-dependent pricing is common in many European countries.
Despite reports in local media that some motorists had complained it was "unfair" to be charged more at certain times, Kirelis is unrepentant.
"I don't see anything bad in this. If you were on your way home from work in the evening, would you go somewhere else where it is more expensive or would you come here where you know it is cheaper?" he asks.
The Irish Times could find no evidence of motorists unhappy with the Maxol policy.
"If it gets people in, fair play to them," said one customer on the forecourt. "A lot of locals know about the price changes and come here in the evening to fill up when it's cheaper."
The ongoing battle for trade among fuel stations would benefit consumers, another man said. "If this starts a price war, that can only help motorists."
The evidence suggests Carlow's price war began a long time ago. Last Saturday afternoon, three filling stations within a 1km radius of the Maxol garage were matching its price of 114.9 cent per litre for petrol and diesel. In contrast, the average price around Ireland, according to price-tracking website pumps.ie, was 119.9 cent per litre.
One of Maxol's main competitors in Carlow is Topaz, which has two stations in the town. Company spokesman Kieran Garry said that, of its 350 Irish stations, 100 have their prices set by Topaz, which has no plans to adopt a practice of fluctuating prices.
However, should the other stations, which are dealer-operated and responsible for their own pricing, choose to alter prices daily, they are free to do so.
The issue of the Maxol station's fluctuating fuel prices was raised last week by Carlow Fianna Fáil TD MJ Nolan at a meeting of the Oireachtas energy committee, at which the fuel supply companies stoutly defended their pricing policies against claims recent falls in world oil prices have not been passed on to the consumer.
Since then, Maxol chief executive Tom Noonan has written to Nolan to again defend the "innovative" practice of the filling station and compare its pricing policy to that used by airlines and hotels.
"It certainly demonstrates the lengths to which service station operators will go in these troubled times to try and generate extra volume," says Noonan.
"I would expect the outlet in question to comply fully with its legal obligations and especially in relation to price display.
"After that, I will leave it to consumers to adjudicate by their actions on the merit or demerit of the approach in question."
Noonan also points out that Maxol does not set pump prices and because of the nature of its operations, it was not allowed by competition rules to interfere in the pricing policies of forecourt retailers.
Petrol retailers are required by law to display their prices clearly so they can be read by passing motorists.
Industry representatives who attended last week's Oireachtas meeting contrasted this with the pricing display laws governing food retailers.
"Some supermarkets seem to hide behind artificially low pump prices in order to lure people into their stores, where they have an unfettered opportunity to manage the price for the goods on their shelves with impunity and then go to great lengths to avoid publishing the profits they make from their operations in Ireland," Noonan said.
He encouraged motorists to be aware of pump prices and to make "informed choices" about where to fill up.
In other words, keep an eye on the filling station price lists. Things may be about to change.