The problem of performance measurement in the UK petrol market

Abstract

This paper discusses the problems in the measurement of performance experienced by UK petrol wholesalers - the companies that supply petrol to petrol stations. These wholesalers find it essential to get involved in the retailing as well as wholesaling activities of the business, which further aggravates their performance measurement problems. We attribute these performance measurement problems, whether wholesaling or retailing in nature, to inadequate information, which in turn is ultimately brought about by regulatory restrictions. The performance measurement problems put existing competitors at a disadvantage and have contributed to the rise of non-traditional (non-oil) competitors to enter the market and secure a significant market share. It is suggested that whilst the new entrants benefit the motorist in the short term, they are not in his/her long-term interest. This paper makes the point that the regulatory authorities should re-examine this market but not with the aim of chastising existing competitors. Rather, a more positive aim should be to address the difficulties that they themselves have created by interference with free market forces.