One of the many unpleasant aspects of the 1980s was encapsulated in the yuppie slogan, "When the going gets tough, the tough go shopping."
It seems oil companies are modifying this for the 1990s along the lines of "When the oil price falls, majors go retailing."
For example, in Australia in the 1970s oil companies began to put convenience stores on their forecourts so customers could buy milk, bread, pet food, and snacks when they filled their gasoline tanks.
BP Petroleum Development Australia Pty. Ltd. spotted this and thought it was a good idea. So the BP Express Shopping network was born in Australia and has now grown to 82 sites with $80 million/year in revenues.
COMPETITION
BP Oil U.K. Ltd. brought the idea to Britain in 1985 and now has 37 stores with combined revenues of $26 million/year. Esso U.K. plc and Texaco Ltd. soon joined in. Now BP reports that half its forecourt customers do not even buy motor fuel.
Two weeks ago Shell U.K. Ltd. was reported to be stirring up the fight for motorists' money by announcing a 250 million ($480 million) spending spree, which will place as many as 1,000 food shops on its forecourts. It already has 350 and intends to add 650 by 1995.
But the news that will get the marketing men working their calculators came last week from the U.K. Department of Transport. More motorway service areas-refueling and eating places on main highways-can now be built because the required minimum distance between them has been reduced to 15 miles from 30 miles.
That could double the 44 service areas currently in place. And when you take into account new motorways that have no service areas yet, the figure could be higher.
NEW MARKET
Nobody has put a figure on this potential market, but it will not be small. For its latest service station, on the M74 route at Gretna Green, Scotland, BP reckons 300,000 motorists will stop for fuel each year.
If, as Shell says, motorists spend an average 20 ($39) every time they fill up with fuel, that makes 6 million ($11.6 million)/site/year. And if you take a conservative estimate of 20 new service stations arising from the government's new rules, a 120 million ($230 million) market could be created.
The final figure could be higher-or lower, of course. Whatever the case, companies in a number of business sectors will be interested, so the pressure is on oil companies to stake a claim.
A forecourt is a calmer, cleaner place than a drilling rig, but the business is just as tough. Like the oil industry all the way through, you need fast feet and a fat wallet to stay in the game.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
