WATCHING THE WORLD FUEL TESTS SPARK RETAIL FEUD

Retailing of automotive fuels is approaching a point at which the aims of the old market structure - secure country-wide access and price uniformity - are in direct conflict with today's aims of choice and competition in a diverse, liberal market.

So says John Collins, chairman of Shell U.K. Ltd.

The U.K.'s 20% surplus refining capacity is said by Collins to have stimulated the rapid penetration of supermarket chains into motor fuel retailing. Supermarkets have taken 16% of the U.K. automotive fuel market, and their share is growing rapidly.

Relations between oil companies and supermarkets have been tense. Open warfare broke out recently when London's Times newspaper reported a test that showed Shell gasoline kept an engine markedly cleaner than fuel without added detergent purchased from a major supermarket.

A 1.2 1. engine car was run for 40 hr to simulate 1,200 miles of town and highway driving. Two of the engine's four cylinders were run on Shell Advanced gasoline and two were run on the supermarket's base fuel.

POWER OF ADVERTISING

Shell ran an advertisement to publicize the test results.

"On the inlet valves of the cylinders which had run on Shell Advanced Petrol only 1.5 mg of carbon was found, compared to 563 mg on those which had run on the supermarket's own petrol," said the advertisement.

Cathryn Hickey, technical fuels manager at Shell U.K., said, "The supermarkets claim there is no proof that detergent in petrol works. This test sets the record straight."

Proof that advertising also works came when supermarket chain J. Sainsbury plc announced Nov. 8 it was the first supermarket to offer customers own-brand gasoline with added detergents.

CLEANUP

Sainsbury's said it would have introduced gasoline with detergent additives before if it had been able to buy stocks. An official said own-label fuels had been supplied by several majors and independents, not all of which could provide gasoline with detergent additives.

Eighty of the supermarket's service stations began selling fuel with additives Nov. 8. The remaining 50 were due to start Nov. 25.

The Sainsbury official said detergents recommended by the Automobile Association are now being added by those same suppliers. The reason for staged introduction was given as differing abilities of suppliers to adopt detergent addition.

Sainsbury's claimed it will maintain price levels because detergent additives cost only 0.1 pence/1 (0.15/1.). The company said its price of 2.09 ($3.13)/imperial gal compares with a U.K. average of 2.24 ($3.36).

A Shell official quoted a Sainsbury's statement in Grocer magazine in October. This said customer benefits of detergent additives were imperceptible, and "...putting detergents in fuel has been an oil company marketing ploy for a number of years."

Besides, he said, "If additives are so cheap, why didn't Sainsbury's do this before?"