Fuel prices keep dropping!!!

A few months ago, fuel prices kept going up and now it does not look like anything can stop it going down. Within the last few weeks, it dropped \10/L. It has been dropping for the last 13 weeks.

The reason is that after the price of crude oil dropped, all the oil distributors dropped their wholesale price; with declines in forward prices and prices on the spot market, it looks like this trend is going to continue for a while.

For us in the car business and the consuming public it is good news but unfortunately the rising petrol prices 6 months ago caused consumers to avoid cars and a slight decrease in fuel price is unlikely to bring them back behind the wheel.

So at the moment, it does not matter how low the fuel price goes down; unless the demand recovers, petrol stations cannot remain in their business. They are struggling to get customers by lowering their prices even more. Our office is in the middle of Tokyo and the petrol price around here is higher than other places because of the location but once you are out of the city centre, the price on the display gets cheaper.

Yesterday, I drove on a main road to get to an auction place and noticed that the further it is away from the metropolitan Tokyo, the price of petrol on the display gets lower by 1-2 Yen. In the end, I found a station near the auction place with the price about \10/L cheaper than the ones by our office and filled our company car there. I felt a bit lucky. However I only filled with 20L this time, hoping it gets cheaper next week or a week after; then I will fill it up again.

I heard that 70% of the 43000 petrol stations in Japan are now operating at a deficit. It comes from excessive competition. The only way to keep their business in this slow time is to decide the display prices by carefully thinking about the prospective move of crude oil prices and surviving through the fierce price war. Badly located or small scale petrol stations disappear every year but it looks like petrol stations without management flair might have a hard time for a while.

They are hoping the same thing as us used car dealers: recovery of domestic demand in the country. How can we make people use cars again? The time seems to be tough now.


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(Editor)
JPC TRADE CO.,LTD.
Kato building 4F, 1-1-2 Furuishiba, Koto-ku, Tokyo
Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
FAX : +81-3-3643-4955