Petrol prices are set to soar at key moments in the day and year, thanks to an experimental new pricing system.
‘Surge pricing’ is used by companies like Uber to manage pricing during periods of high demand. For example, if you want to get a cab through the ride-sharing app, you’ll pay more during busy times.
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Now, this technique, known more euphemistically as ‘dynamic pricing’, is set to hit petrol station forecourts. Danish company a2i has been experimenting with surge pricing for fuel, and believes that it could be the future for garages across Europe and the States.
What is surge pricing?
Surge pricing has been popularised by ride-sharing company Uber. During busy periods, for example the rush hour or in bad weather, the company hikes their prices, reportedly sometimes by as much as 400 per cent.
Uber says it’s necessary to manage demand, and to get more drivers out when they’re needed. But if it’s adopted across a wider range of goods and services, dynamic pricing could represent a dramatic shift in the relationship between consumers and retailers.
Since the introduction of grocery price tags in the 19th Century, shoppers have grown used to fixed prices. Surge pricing could change that.
When will I pay more?
Surge pricing for petrol is already the norm in a number of European countries, and firms like a2i are looking to sell the technology to the UK. The head of one electronic pricing firm told the Telegraph that interest amongst UK firms is starting to “go berserk.”
It is thought that surge pricing will increase the price of fuel during peak periods such as the school run and bank holiday weekends. According to some reports, prices could fluctuate over the course of a day by as much as 90 per cent.
Clearly, wild fluctuations in the price of fuel could have significant impacts on tradespeople and other small business owners who use vehicles for work. There is concern that it could turn filling up a van into a gamble, in which it becomes impossible to plan ahead for fuel outgoings.
What else will dynamic pricing hit?
Petrol isn’t the only thing that surge pricing enthusiasts have their eye on. A spate of stories this week suggested that digital price tags could be coming to a whole range of supermarket items, allowing retailers to adjust prices for goods according to demand.
For example, on sunny days, the price of ice cream and bottled water might rocket, but if there’s a glut of eggs, the cost might drop.
Supermarket Morrisons are reportedly already trialing the scheme, and have plans to roll it out nationally. Unsurprisingly there has been some backlash to the reports, with consumers concerned that it could increase the price of their weekly shops.
Are you worried about surge pricing for fuel? Do you think it’s fair or unfair? Let us know in the comments.