State officials in charge of regulating competition in Norway are urging motorists to buy gasoline (petrol) on Sundays, when the price usually dips before being jacked back up again on Monday. They want consumers to be much more aware of the gasoline stations’ tactics.
The state officials at competition authority Konkurranse-tilsynet have been studying the Norwegian fuel market, as part of evaluating whether they should allow the Finnish gasoline station operator St1 to take over Shell’s stations in Norway. They have already characterized competition in the market as “very limited,” with too few players as it is.
“The background for this is that the four national filling station operators have managed to quietly coordinate their behaviour in the market,” said competition director Christine Meyer. “Among other things, they all raise their prices every Monday and Thursday. The consequence is higher prices for consumers and higher gross margins for the companies.”
Meyer and her regulatory colleagues claim they also have information that several gasoline station operators have a stratgegy of keeping prices as high as possible in a local area, instead of challenging neighbouring stations to lower their prices.
“The price hikes on Mondays and Thursday, and the way they’re carried out, hurt competition,” Meyer said. “The authority has no indications that they carry out illegal cooperation today, but we want to invite each individual company to a meeting to discuss how prices at the pump are set.”
Her colleague, project leader Petter Fedje, said that more and more motorists are already filling up their tanks on Sunday evening or early Monday morning, when prices are lowest. “That’s good for competition,” Fedje said. “If you need to fill your tank before the weekend, you should do it before the week’s second price peak on Thursdays.”
Statoil Fuel & Retail, now owned by a Canadian firm, is the largest operator in the Norwegian fuel market. Spokesman Knut Hansen told news bureau NTB that Statoil is glad the competition authorities have been examining the market and that they haven’t found any signs of illegal price coordination. He noted, however, that for every price increase, there’s also a price decline that the authorities didn’t mention in their evaluation of the acquisition sought by St1.
The authorities determined that St1, as a self-service chain selling only fuel, with no personnel present at its stripped-down stations, generally has the lowest prices at the pump and thus contributes to tougher competition. If it also had been allowed to take over all of Shell’s stations, however, there would have been one less player in the market, meaning competition could be further limited. St1 therefore offered to sell all its own stations in order to take over Shell’s, and that’s been conditionally approved pending the entry of a new player into the market.
Finance Minister Siv Jensen, meanwhile, has also been critical of the gasoline station business in Norway, because tax reduction that she pushed through hasn’t been reflected in pump prices. She wants a clarification and said she’s looking forward to hearing what the station operators will have to say at a meeting she’s called next week.
Pump prices continue to hover around NOK 15 a liter (USD 7.50 a gallon) even though the price of oil has fallen by half since last year. The station owners claim that’s tied to the weakness of the Norwegian krone against the US dollar, and the fact that tax makes up much of the price in Norway.