The Development of the Solus System of Petrol Distribution in the United Kingdom, 1950-1960

Abstract

For three years after the end of the war, petroleum products continued to be distributed in the United Kingdom under the control of the Petroleum Board, into which the personnel and physical resources of the industry had been organised in 1939. The Board was dissolved on June 30th, 1948, and the physical assets returned to the control of the individual companies. During the following year the industry worked within the framework of a Mutual Aid scheme, operated by a central group (composed of representatives of the larger sellers) which exercised control over the import and distribution of petroleum products. After this scheme had ended, normal trading in petrol was still prevented by rationing. With the removal of rationing in May, 1950, the wholesale petrol market closely approximated that of a conventional model of undifferentiated oligopoly. Each seller offered a perfectly substitutable good-the pool grade of petrol which had been introduced during the war and which continued to be the sole grade permitted by the government until 1953. The number of sellers was small, and three large groups dominated the market. The largest, with over half of the market, was Shell Mex and B.P. (S.M.B.P.), which had been established in 1931 to market the products of the Shell group and the Anglo Iranian Oil Company. Closely associated with S.M.B.P. were National Benzole (bought by S.M.B.P. in 1956), Power and Dominion. The second largest seller was Esso Petroleum (Esso), the British subsidiary of the Standard Oil Company (N.J.), which, together with its subsidiary, Cleveland, had approximately one quarter of the petrol market. Third was the Regent Oil Company, a marketing organisation established by Trinidad Leaseholds and the California Texas Corporation, with about one eighth of the petrol market. The fringe of the market included Fina Petroleum Products, an amalgamation of smaller distributing firms accounting for approximately 3 per cent. of the petrol market.' New entry by small companies was made all but impossible by developments in the early post-war years. Restrictions on dollar purchases cut off access to supplies from the Americas, and the cheaper