Selling and buying petrol

Pinoso has lots of community websites. The English language one I tend to look at most often is a Facebook page called Pinoso Community. People use it for a whole range of things from lost dogs and questions about where to find services to checking to see if anyone else is having trouble with their Internet provider or power supply.

The other day someone, on that page, commented on the price of fuel in the local filling stations. They weren't really complaining about the high price of petrol but more about the price fluctuations between different garages and even in the same filling station.

I thought it might be an interesting blog - why and how the price varies. As I started to investigate I found the information both complicated and contradictory. In fact I decided that to do it properly would be both boring and long. That didn't stop me though. So, if you continue, expect boring and long. And sometimes, simply because of the complexity, I've oversimplified. There is also a lot of imprecision in my use of petrol stations, garages, petrol and the like. I'm sure you know what I mean - gasolineras and carburantes.

The cost of petrol and diesel at the pumps is based on several factors such as the cost of the crude oil, the refining costs, other on costs including additives, transport, the distribution network, payments to intermediaries, tax and, of course, profit margins. Some of those costs are unpredictable, for instance the cost of the crude is subject to international fluctuations based on big news, things like war, changes in government or how OPEC increase or decrease the flow of oil to suit their own ends. At the Spanish pumps about a half of the cost of a litre of diesel is taxes, for petrol it's about 55%. At the moment, and until the end of the year, there is a 20c discount on each litre of fuel funded, in the main by government, presumably from the tax income, and partly from the petrol companies.

The fuel price varies from day to day because someone, somewhere in the organisation that runs or provides fuel to the filling stations, is keeping an eye on all those factors so they can provide a guide price to "their" petrol stations. The time that each group notifies the new price varies from group to group but most tend to do it once a day in the morning. A few years ago some of the big providers were taken to court, and lost, for price fixing between them. Presumably they no longer do that. Nonetheless the prices in the stations of the major brands, those with similar characteristics at least, are still remarkably similar. Geography and competition are an important part of deciding on the price at the pumps. Pinoso, as an example has two (obvious) petrol stations whereas, in Elda, the entrance to the town has at least six or seven very closely grouped - more competition, lower prices. Fuel nearly always costs more in rural areas than built up ones. There is an exception to that, rural co-ops provide some of the cheapest fuel in Spain but that's because profit is only one of their concerns.

The price of crude oil on the world market is given in dollars. Exchange rates mean that even if the price of oil was steady over several days, or even weeks, the price would still vary because of the currency markets. Anyone with a pension paid in Pounds and turned into Euros will be aware how big those variations can be. The price of refining the crude oil also varies between the different refiners because, just like any other business, they try to decide how to maximise their profits while maintaining an adequate market share. 

The refiners typically turn only 11% of the crude oil into petrol. It takes 2.5 litres of crude to make a litre of petrol. As a barrel contains 159 litres all it takes is a bit of simple arithmetic to get to the cost, to the refiners, of each litre of petrol. That's petrol as petrol but as the most basic product. Stored in tanks, and still a long way from the pumps, it is, nonetheless, the starting point for the retail price in all Spanish petrol stations. The big wholesalers are Repsol, Cepsa and BP.  I think, though the information here was contradictory, that their refineries produce all of the petrol and diesel sold in Spain. There are, though, other firms like DISA and Galp, which are important distributors and it's possible that they import petrol from overseas.

Unless you're very rich you will have noticed that fuel costs more or less at different petrol stations. For years there was a state monopoly on fuel in Spain, the name of the monopoly was Campsa. When the monopoly was dissolved it's various parts went to Repsol, Cepsa and BP.  Repsol now owns the brand name. These traditional brands cost more than less recognisable, often low cost, brands. Cut price petrol, the lo-cost stations, are a reasonably recent phenomenon in Spain. Nowadays they are pretty common in urban areas. 

Lots of Spaniards don't trust cheaper petrol. They think it's an inferior, and possibly harmful, product. One of the biggest talking points in that mistrust is additives. All of the big chains say that they have some magic ingredient which makes the car engine run more efficiently. The idea is that the low cost garages don't add these things and that the additives are responsible for most of the price difference. In fact nearly all the lo-cost providers sell petrol with generic additives with similar characteristics to the premium retailers so the fuels are very similar. What is different is that not all petrol stations are as good as others. Some maintain their filters and tank cleanliness better than others for a range of reasons. It's also broadly true that the majority of the lo-cost petrol stations are pretty basic; they don't have attended service or, if they do, there is only one person, there is no shop and they are in places where site rents and the like are lower so their operating overheads are lower. Probably though the real reason that the cheap stations are cheaper is that they are working on the original thinking behind supermarkets - pile it high and sell it cheap. Reduced profit margin but increased profits.

So, like almost everything in a capitalist economy, the advice is to shop around.

Pumping gas

When I had my first cars in the UK, when you could get five gallons of cut price Jet petrol for a pound, there was always someone to serve you. By the time I left I bought fuel in supermarkets and you served yourself. Not so in Spain. When we first arrived nearly all the petrol stations had attended service. I never particularly cared for it. I'm one of those trainspotter type people who keeps records; I like to know how many litres of fuel per 100 kilometres the car is using. The blokes and blokesss at the filling station tend to stop on a round figure's worth of fuel. I suppose it was a habit from the times when people paid with cash. Less change to faff with. Petrol pumps that turn off automatically, as the liquid backs up the hose, and change conscious pump attendants played havoc with my number crunching. There was another reason for my dislike of attended service. Pull up at self service, pump your own fuel, pay with a credit card and the amount of language required would be within the grasp of your average Homus Erectus. Attended service, on the other hand, requires substantial human interaction and language skills.

There wasn't a lot of choice in petrol stations back then either. You could go to Campsa, Repsol or Cepsa stations. Campsa was the name of the old state company and the name belonged to Repsol by the time we got here so the fuel was Repsol too. Those two companies also controlled most of the refinery capacity in Spain. There is and was a BP refinery at Castellon and I'm told there were BP petrol stations too though I'd be hard pressed to remember having ever seen one.

Out here in the fields, to quote the Who, we still generally get attended service though there are now fewer attended service stations than there used to be. Lots of stations have attended service hours and card machines for the rest of the time. My guess is that in the bigger, busier towns and cities it's nearly all self service though most of the stations still have someone to look after the shop or to sell coffee even if they don't have much to do with selling fuel. I've seen lots of complaints from people asking why they should have to pump their own fuel, especially in the stations with no staff at all. Moans along the lines of - is it safe?  - what about people with reduced mobility? etc. Some of the regional governments have even legislated against staffless filling stations on the grounds that they are safeguarding jobs. Ned Ludd is alive and well.

Nowadays there are more retailers though the choice is still quite limited; Galp, Petronor (which is actually Repsol) and Meroil are pretty common and there are occasional Shell and Agip stations. The big expansion though has been in the cut price suppliers. Cheaper fuel has been available in Spain for years now. At first the stations were few and far between and usually linked to supermarket chains but, now, they are everywhere. There's even one in Pinoso. Price differences are substantial. In the order of 12 to 15 cents per litre.

Spaniards tend to have shared views on things. Go swimming too soon after eating and you are going to sink. Drink hot drinks whilst you eat and expect health complications. Online shopping is risky. One of those certainties is that cheap fuel is poor fuel. The big brands, the known brands are safe but some unnamed fuel isn't. Some friends were assured by a main dealer that the reason the engine on their car packed up was because they habitually bought cut price diesel. When I've pointed out to Spaniards that all the petrol comes basically from the same refiners (Repsol, Cepsa and BP) their answer has been, as one, that the full price people put stuff into their petrol, that makes it good, whilst the cut price people don't, which is why it is bad. I've heard it so often that I half believe it and so I tend to fill up alternately with cheap and full price fuel. I never really believed it wholeheartedly though because I know that Spain is in Europe. I know that the EU puts controls on lots of things, amongst which, I'm sure, is fuel quality. If it says 95 octane then it's 95 octane, if it says Gasoleo A then it's proper diesel whether the stickers on the pumps say Bongofuel or Repsol.

Anyway, a couple of weeks ago as I accelerated the car onto the A31 the engine warning light came on and the power fizzled away. It wasn't a pleasant experience trying to get to the hard shoulder but the car fired up again and we got home. The chap who looks after the motor found a fault, a seal had gone on the hose into the turbocharger. He fixed it. Obviously he'd found the fault. But later the warning lamp lit up again. The second time I was in the middle of an overtaking manoeuvre. There was a lot of headlight flashing from drivers wondering why I had overtaken only to slow right down again. The mechanic had another go. He found clogged fuel filters. We had a conversation about fuel quality. He refused to be drawn on the question of cheap versus expensive fuel. He told me a story, a story that he stressed was only hearsay, about mislabelled fuel, cheap fuel sold as expensive fuel. I thought back to the day that the car first coughed. I'd been to a cheap fuel station.

Maybe I should be more careful about eating and swimming too!