Road Fuel Prices: Display

STATES OF JERSEY

ROAD FUEL PRICES: DISPLAY

Lodged au Greffe on 23rd August 2011 by Senator A. Breckon

STATES GREFFE

2011   Price code: B  P.146

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to  request  the  Minister  for  Economic  Development  to  bring  forward  for approval the necessary legislation to introduce a requirement for all retailers of road fuel to display the price of road fuel on sale so that it is clearly visible to passing motorists from the adjacent roadway.

SENATOR A. BRECKON

REPORT

For many years there has been an issue in that motorists did not know until they parked at a petrol pump what the actual price was per litre – this was usually due to either poor or non-existent signage.

Whilst not wanting to litter the Island with massive advertising hoardings, I believe that  there  needs  to  be  a  balance  which  enhances  consumer  information  so  that consumers can make informed choices, not only about price, but also about levels of service, location, etc.

In general terms, it has been widely known and accepted that the States have produced or  commissioned  expensive  Reports  and  then  not  acted  upon  any  of  the recommendations. I believe that the JCRA's Report contains something that can be acted upon with the minimum of fuss and the maximum effect.

The JCRA's Report at page 6 states –

It appears that there is room for road fuel prices in Jersey to be subject to greater  competitive  pressures,  and  if  clearly-displayed  prices  from  the roadside resulted in heightened price awareness and competition such that, for example, the average price reduced by just 1ppl, this would be equivalent to a direct £430,000 per year saving to Jersey consumers, in addition to any benefits from increased competition driving greater efficiencies.

In  light  of  the  above  evidence,  I  believe  it  is  worth  making  a  change  to  the Regulations.

On 3rd August 2011, the Jersey Competition Regulatory Authority (JCRA), published a Report: "Review of the Jersey market for road fuels". The Report had this to say –

4.5  Advertising the price of road fuel so it is visible from the road

One key difference between Jersey and most European countries is that it is not common in Jersey for the price of road fuel to be displayed so it is clearly visible to passing motorists. A survey carried out by JCRA in early July 2011 found that of the 34 retail forecourts, only 9 displayed the price so that it is clearly visible from the road, and of these 9, it was considered that only 5 displayed  the  price  such  that  a  passing  motorist  would  notice  it  without specifically looking for the price information. Returns from a questionnaire to the retail forecourts also showed 8 garages claim to display prices so they are clearly visible from the road. Annex 1 contains photographs of the type of fuel price displays typical in Jersey.

Figure 4.6 Consumers' views on whether forecourts display prices

The   Price  Indicators  (Jersey)  Regulations  2008  require  prices  to  be unambiguous, easily identifiable and clearly legible, on or in proximity to the goods. Therefore just displaying a price at the pump is sufficient to satisfy Jersey Regulations. There is no legislation in the UK that explicitly requires the display of fuel prices from the roadside, although the UK's Consumer Protection from Unfair Trading Regulations 2008 deal with the concept of misleading omissions and, arguably, not displaying the price so that it is visible from the roadside could be challenged under these Regulations if a failure to do so could be shown to alter consumers' transactional decisions.

It is extremely rare in the UK for a forecourt not to display the price on a large electronic sign and it seems likely that a failure to do so would be viewed as suspicious by most UK consumers. Stakeholders told us that price competition in the UK is such that the price displays are seen as essential marketing and advertising tools.

Road  fuel  is  a  frequently  purchased  good –  and  consumers  have  the opportunity to learn about the price, and terms and conditions, of frequently purchased goods. However, the price of road fuel changes more rapidly and often more significantly, compared to other goods. In Jersey it is possible for a consumer to drive to a forecourt, park next to the pump, and then find out the price – this is likely to play to a consumer bias of commitment and consistency; that is, once people have made some commitment to an action, they are likely to be consistent and follow through with that course of action. In this case, the action is the choice of trader.

Consumers may become price aware about road fuels from various sources: from consumer price comparisons in the press, from experience and word of mouth.  In  the  UK,  there  are  two  additional  sources:  consumer  price comparisons sites on the Internet, which are becoming increasingly popular, and  roadside  displays.  It  seems  extremely  likely,  given  the  nature  of  the product,  that  roadside  displays  play  an  important  role  in  increasing awareness of price differences between retailers, not only because to know the price before entering the forecourt facilitates practical shopping around, but that  noticing  the  advertised  price  of  fuel  as  people  go  about  their  daily business may also be a significant factor.

Stakeholders gave us a range of views on roadside displays: some argued that prices  displayed  so  they  are  visible  from  the  roadside  would  make  no difference at all, while others agreed that it would make a positive difference and said they would be in favour of all retailers displaying fuel prices so they are visible from the road. In our survey of Jersey consumers, 183 people (91%) said that they thought the price of petrol should be clearly displayed so it is visible from the roadside. Most industry stakeholders raised the question of planning permission, and one retailer told us that it had been refused permission to erect a pricing sign. Another had a more positive experience with the Planning and Environment Department, saying that it had managed to find a satisfactory solution.

We discussed these issues with officers from the Planning and Environment Department,  who  were  keen  to  stress  that  they  were  open  to  reasonable proposals for displaying pricing signs, taking into account the character of the  area,  the  particular  circumstances  of  the  property,  the  level  of illumination, and the impact on road safety.

We asked retail forecourts whether they displayed the price so it was visible from  the  road,  and  if  not,  why  not?  Most  did  not  answer  the  question, although responses did include:

"Makes the place look tacky and have to be changed constantly"

"We do not advertise pump prices because we are not in a position to compete with much larger sites that pump circa 9 or 10 times as much volume  as  we  are  able  to.  We  rely  on  our  location  and  loyal customers who understand the costs of doing business as a small parish service provider are much higher than other larger sites that are able to facilitate much larger volumes and can also afford to use fuel as a loss leader".

The second quote above includes a suggestion that not displaying the price so it is visible from the road may be part of a strategy to avoid price competition, at least for this particular retailer. We do not dismiss the point about the value of  local  service  providers  and,  as  we  acknowledged  earlier,  although consumers may welcome keen price competition driving down prices, those same consumers, as citizens, may regret the resulting decline in small local providers.

Obliging  retailers  to  display  prices  would  impose  a  cost  and  at  least  a proportion of these costs are likely to be passed on to consumers. There is no evidence from those already displaying prices that that cost is a factor in current retail levels. To put the issue of costs in context, however, it appears that  there  is  room  for  retail  prices  in  Jersey  to  be  subject  to  greater competitive  pressures.  For  example,  if  clearly  displayed  prices  from  the roadside  resulted  in  heightened  price  awareness  among  consumers  that increased  competitive  pressure  which  resulted,  for  example,  in  a  1ppl reduction in the average price paid, this amounts to a direct £430,000 per year saving to Jersey consumers, in addition to any benefits from increased competition driving greater efficiencies.

The JCRA is of the view that displaying prices so they are clearly visible from the road is likely to contribute to the development of competition in road fuel and make a positive contribution to consumers' rights to have sufficient notice of the price to be paid before they have made a commitment to a particular trader.  While  we  acknowledge  that  there  will  be  a  balance  to  be  struck between planning restrictions and the clear display of prices, it seems unlikely to us that this balance is impossible to achieve.

The JCRA strongly recommends that all forecourts should display price signs that are clearly visible from the roadside. If the JCRA's recommendation is accepted, further work would need to be undertaken with the Department for Planning and Environment, Trading Standards and the industry to formulate the obligation to, display prices in practical terms. It seems possible that the change  could  be  brought  about  relatively  easily  by  incorporating  the requirement into the Price s Indicators (Jersey) Regulations 2008. Any change would, of course, need to be followed up with appropriate enforcement so the change becomes part of the normal business practice of the road fuel market in Jersey. We note that the Isle of Man brought about a requirement to display the price of fuel so it is visible from the roadside with the following wording in its Price Marketing Order 2005:

 In  the  case  of  motor fuel  an  indication  of  unit  price shall  be displayed on the premises from which it is sold in such a manner that it is easily read by a person in a motor vehicle on the highway from whichever direction he may lawfully approach and enter the premises.

I believe that there is a considerable consumer benefit that can be achieved by some prominent but not over-the-top signage.

Financial and manpower implications

There are no direct costs to the States for these amendments. Garages will have some cost in displaying and maintaining signage, however, this will not be excessive, as in 2010 according to the JCRA's report, Jersey motorists spent about £41.4 million on road fuel.