Company suggests “surge pricing” for fuel | Smart Highways Magazine: Industry News

Company suggests “surge pricing” for fuel

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A Danish data analytics firm is suggesting that petrol companies could use learning algorithms to vary fuel pricing depending on demand, which would increase margins by around 5%.

a2i says its PriceCast Fuel managing price setting for each product on each station within regional corporate constraints would “give the best possible results” according to the regional budgets and objectives.

In its report it says, “Dynamically mapping customer and competitor behavior in order to identify the optimal route (price setting) through out the day, makes it possible to relate to any given change in the local situation for a given station and re-route accordingly when necessary and within seconds.”

In a suggestion which is seen as being similar to Uber’s surge pricing, where the cost of a journey varies depending on demand, a2i says, “The world is dynamic! No matter whether you have 3000 or 300 stations in your regional network, each station exists in a world of its own. The impact of location, the season, the day, the time, the competition, the weather, your brand image and your pricing plus many other factors, will be differ- ent from station to station and product to product. It is not even likely that one station will ever experience two Wednes- days with an identical product sale.”

But the idea has not gone down well with the RAC.  Reacting, RAC fuel spokesman Simon Williams said, “While this technology may seem great for retailers such an approach to fuel pricing appears to be a step backwards which will leave a bad taste in the mouth of motorists. This will take what little trust and confidence drivers they have in fuel retailers to a lower level and will be seen as a cynical way to increase prices by stealth.

“It is odd that the supermarkets who command high volume sales and claim to operate on low margins would chose to manipulate prices in such a way at the risk of alienating customers. Fuel is a commodity product and its price is clearly promoted on forecourt totems to draw in customers. Therefore increasing the price of fuel which they have already bought at one wholesale price seems very underhand.

“We closely monitor daily fuel prices to increase transparency and to encourage supermarkets and retailers to play fair with motorists. However if they are able to increase the price during the course of a day then it blows a smokescreen over the true cost of fuel. Drivers already feel they are paying some of the highest fuel prices in Europe and any move which appears to increase retailers’ profits at periods of high demand will be viewed with anger by the UK’s 38 million motorists.”



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