Petrol and Oil

Petrol and Oil Prices

Gordon Brown has recently demanded that Petrol Prices should fall in line with Oil Prices. This is an astounding demand as the petrol forecourts have clearly being working hard over the last few days to keep track of the massive swings in oil prices. The supermarkets are leading the way, but we at whatgas.com can conclude that most, if not all, of the oil price drops are being passed onto the consumer. It isn't happening quite as fast as the public would like, but as Oil prices drop, petrol is being pulled down with it.

It seems that politicians have given up trying to have control over the banking sector and are trying to pretend to influence a system that is already working well. Perhaps next week the Home Secretary will demand that the Sun rises each morning?

There are many things wrong with our petrol industry, but it all stems from the massive amounts of taxation that are levied on our fuel - The politicians are pointing the finger at the wrong people this time around, the poor forecourts take only 2p per litre sold, leaving little room for error when it comes to pricing, whilst the government takes over 52p/litre!

The graph below shows how the average Oil Price has varied for the last 12 months, and this oil price is compared to the average price of unleaded 95 in the UK. It can be seen from the graph below that there is a good correlation  between the oil and unleaded petrol price. If the price of oil starts to rise, then so does petrol. If the oil prices fall then this drop in price gets passed on to the vehicle owners, infact there is even evidence that suggests that in Jun and Jul 08 the forecourts managed to protect the motorist from the full effects of oil prices.

Its not not good news, looking at the data for Nov 08 the price of petrol is due to drop by at least another 5p to keep in keeping with histrorical changes. However there has been an unprecedented drop in oil 'spot' prices in the last few weeks and the fuel sellers will be struggling to keep up. Typically oil may be bought 3,6 or even 12 months in advance so it takes a while for these sharp changes in prices to filter through to the pumps.

We should see unleaded at less than 90p a litre before Christmas, if we don't then maybe those petrol companies are taking advantage after all...

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The eagled eyed will may however notice that the price difference between Diesel and Unleaded has widened compared to last year. Again it is tempting to blame the evil petrol companies, but unfortunately the fact is that as fuel prices have risen Europe as a whole has switched more and more to Diesel cars. This is causing a large problem with the oil refinaries who cannot modify their plants overnight and as a result they have to pump out Diesel fuel using less efficient processes. This costs them more and hence the price goes up.