Petrol prices hit £1 a litre in Suffolk

By Benedict O'Connor

ROCKETING petrol prices in the wake of Hurricane Katrina have forced petrol prices over the £1 mark for the first time in Suffolk.

The continuing rise in prices is not only having an impact on motorists, but could also push rural businesses toward financial ruin, according to one petrol station owner.

John Smith, owner of Norton Service Station, near Bury St Edmunds, said he had been forced by petrol suppliers to put his price for a litre of unleaded petrol beyond the £1 mark and made less than 3p a litre profit.

This compares to a national average of 92.3p a litre for unleaded fuel, with the price of diesel standing at 98p at Mr Smith's garage, broadly in line with the national average.

Mr Smith, who has been in the trade for 40 years and can remember when petrol cost less than £1 for four gallons, said spiralling costs and competition from supermarkets could force him out of business.

“On Friday after the hurricane the price from the supplier went up by 8p or 9p and we went from 95p or 96p a litre to £1.03,” he said.

“I didn't want to put it up, but the situation has been forced upon us, I've had to take a cut to keep it as low as that.

“The petrol we sell here just about covers the overheads, it's almost entirely run as an extra service for the community, we don't make any profit out of it.

“Fortunately, we offer other things here, but if we had to exist on selling petrol it just wouldn't be possible.”

Mr Smith said petrol sales had dropped off severely since the price rise was introduced and this had a knock-on effect on sales of refreshments and other goods at the service station.

He added: “The fact is small independent retailers are being pushed out by supermarkets, who are not subject to the same rates as us and effectively get subsidised for the petrol they sell and they are always going to be cheaper.”

Mr Smith started as an apprentice at the Norton Service Station in 1965 and gradually worked his way up to become owner of the business, which also includes a post office, mechanics workshop and tyre business and which is the village's only shop.

He has already made changes in the business to keep the 13-strong workforce in employment and feared that when he retired the business could be bought as development land.

“I don't need to remind anyone about the loss of post offices in Suffolk and this is the only shop left in the village now, serving not just Norton, but the surrounding villages, and I would hate to see it go,” said Mr Smith.

He said the reaction to the price rise from customers had largely been to shop elsewhere, but he hoped to buy some cheaper petrol and force the price back down towards the end of the week.

Hurricane Katrina brought crude oil production in the Gulf of Mexico to a standstill, forcing the price of oil stocks worldwide to rise sharply.

Ray Holloway, director of the Petrol Retailers' Association, said the price could be expected to fall back soon as refineries started work again, but predicted diesel users in particular could face further price misery in the run-up to Christmas.

“Diesel is in a different position and pressure on oil prices will continue to push upwards regardless of what happens to petrol,” he warned.

Mr Holloway said the rising popularity of diesel was forcing huge investment in refineries producing diesel, which would be passed on to the consumer, and he predicted a £1 national average per litre during the coming winter.

benedict.o'connor@eadt.co.uk