Fuel Prices
- Thread starter joer
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Funny how the slightest hiccup in the supply chain causes prices at the pump to rise immediately.
The crude stuck in the Canal will not be refined for weeks yet and the raw crude that is being pumped out and sold for the higher price won't reach the forecourts for months
Extra profits for those who own the oil stock on the ships bought at a lower price and now to be sold at a higher price to the motorist.
I don't remember it ever works the other way round - when the raw price drops, we have to wait for the existing stocks to be used up before the price drops at the pump
The crude stuck in the Canal will not be refined for weeks yet and the raw crude that is being pumped out and sold for the higher price won't reach the forecourts for months
Extra profits for those who own the oil stock on the ships bought at a lower price and now to be sold at a higher price to the motorist.
I don't remember it ever works the other way round - when the raw price drops, we have to wait for the existing stocks to be used up before the price drops at the pump
EasilyAmused
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Insurance is less with EVs? Why’s that?
Too many people jump on this "prices rise immediately" bandwagon without checking any facts whatsoever.Funny how the slightest hiccup in the supply chain causes prices at the pump to rise immediately.
The crude stuck in the Canal will not be refined for weeks yet and the raw crude that is being pumped out and sold for the higher price won't reach the forecourts for months
Extra profits for those who own the oil stock on the ships bought at a lower price and now to be sold at a higher price to the motorist.
I don't remember it ever works the other way round - when the raw price drops, we have to wait for the existing stocks to be used up before the price drops at the pump
Fuel pricing is probably the most transparent pricing of any consumer goods.
1 - The Raw oil price is available online from hundreds of websites.
2- The raw oil price chart is also available on the same websites and can go back years https://finance.yahoo.com/quote/BZ=F
3 - 6 Months ago oil was $38. Today it is $63. That's a 60% increase.
4 - oil prices spiked to near $70 from early March to about 23rd March when it dropped back to approx. $63. Its this spike to $70 that fed into fuel stations 2-3 weeks ago. The suez incident did not affect oil prices.
5 - there are 159 litres in a barrel of oil. that gives a euro cost per litre of 34c based on the $63 price
6 - it has to be transported to refineries and refined into fuel. That is circa 9c-11c per litre (diesel is the higher). Bringing the cost now to 42c petrol 45c diesel
7 - The biggest cost of all - Excise duty and carbon tax. Petrol 62c, diesel 51.6c. Running total 104 petrol, 96.6c diesel. Again, this is online https://www.revenue.ie/en/companies...cences/excise-duty-rates/mineral-oil-tax.aspx
8 - Then you have distribution costs which is circa 6c-7c / litre. (port tanks, delivery to fuel stations and all the admin work), 111 petrol, 104c diesel
9 - The the retail fuel station has to pay staff, utilities, rent, rates and other costs. They add approx. 7c to the price. 118 petrol, 1.11 diesel
10. VAT @ 23%. petrol 145, diesel 1.36. This is based on the oil price since end of March and this should be the average price next week.
If oil was free (and it was for a short period last year), the pump price would be €1.04 for petrol and 96c for diesel.
Or put it this way. A fuel station makes a far greater profit from a €6.50 coffee + sandwich customer than a motorist buying €50 of fuel.
Very good post @peemac and thanks for taking the time.
Notwithstanding all the facts and figures, over 40 years of buying fuel at pumps has me totally convinced that "prices rise immediately" is not too far wide of the truth.
Imagine, for a second, we wake up to headlines such as:-
OPEC to cut output by 60%,
or
Godzilla destroys over 60% of world's oil refineries,
or
Due to shortage crude oil rockets to $250 a barrel,
Absolutely guarantee within a week (probably less) the pump prices would increase even though they would still be working with held stock.
Reverse the headlines and see how long it would take for the prices to drop.
As I said the above is just based on my own long-term observations and may well be incorrect, but some how, I don't feel it is.
I used to assist with pumps.ie and this subject came up. So a chart was made with oil prices (after exchange rate) and fuel prices and the pattern was steady for the 2+ year period that the figures were compiled. That was both increases and decreases and it worked out as 14-17 days.
News headlines that interest a punter and reality are usually not in tandem. If Opec announced a cut, it would have been flagged in the industry and prices would have risen well before the announcement. Currency changes make a difference too. In February the dollar was over 1.22. its now 1.19. That's 3% on the refined price.
Oil prices have been rising steadily due to positive vaccine outlook and a return to normality. The spike in March was due to hope of summer travel. None of this made headlines in relation to oil prices, yet by early March the oil price had risen over 70% in 5 months.
The Evergiven runs aground and the media say oil prices have risen - they rose about 50c and then fell back. It was a total non event for oil prices, but because it was an interesting event, the media looked at every possible angle to create hysterical headlines because too many journalists don't bother doing real checks.
The pump prices rose and suddenly people are adding 1+1 and getting 20 and its on Joe Duffy etc. But no-one actually looked at the oil price chart which would have taken a few second and they would have seen the increase had happened 3 weeks previously and it was that increase which was feeding into the pumps. Absolutely zilch to do with Evergiven grounding.
EasilyAmused
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Whatever happened to pumps.ie?
I’d used IrishFuelPrices.com for a long time but was an instant convert to pumps.ie when I discovered it.
It was invaluable.
Probably not as important these days will travel restrictions and #StayAtHome, but it would still be handy to have.
Would genuinely like to know what happened.
I never met the guy that ran it. I think he just git too busy with other things. Advertising income for the site was miniscule.
Indeed it does and this is a particular 'bug bear' of mine.
Last May2020 the Euro was as low as $1.09 and recovered to $1.20 in Sept2020, a reduction of nearly 10% (9.2% to be exact) on the refined price.
I don't remember any retail group saying we have reduced our prices because of currency fluctuation but they are very quick to defend their price increase using same.
Anyway I'm not alone in 'thinking' retailers tend to be somewhat slower in decreasing as opposed to increasing prices :-
Petrol stations taking ‘inordinate’ amount of time to lower prices, says consumer group
Petrol groups warn of a ‘significant lag’ before pump prices reflect crude oil price drop
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The oil companies (explorers, drillers, refiners, distributors, retail chains) in the past tended to buy both currencies and oil, crude as well as refined petroleum products, forward in order to provide for stability in the market. This was corporate speak for allowing them to shaft the consumer when crude or ex-refinery prices dropped or to pass on increases immediately, thus protecting their margins. They were "locked into binding contracts" until they decided they weren't really. Like other cartels, they do what they want in their own members' interests.
The Consumer Association just like the media don't bother to check facts or do any actual working out of how its done. (I've shown how easy it is to work out the price) However the CCPC did a very comprehensive study a few years ago and found that prices rose and fell within the same timeframes, but because it did not correlate with what the media wanted, it got very little coverage. Bad news sells news, Good news doesn't.Indeed it does and this is a particular 'bug bear' of mine.
Last May2020 the Euro was as low as $1.09 and recovered to $1.20 in Sept2020, a reduction of nearly 10% (9.2% to be exact) on the refined price.
I don't remember any retail group saying we have reduced our prices because of currency fluctuation but they are very quick to defend their price increase using same.
Anyway I'm not alone in 'thinking' retailers tend to be somewhat slower in decreasing as opposed to increasing prices :-
Petrol stations taking ‘inordinate’ amount of time to lower prices, says consumer group
Petrol groups warn of a ‘significant lag’ before pump prices reflect crude oil price dropwww.irishtimes.com
The dollar started to weaken last May and it gradually went from 1.08 to 1.19 over about 10 weeks.
In that 10 weeks oil prices went from $30 to $45. That's about a 12c (in vat) increase per litre.
But if you check fuel prices from May to August, they barely moved. The weakening dollar cushioned a lot of the increase.
If you go to https://finance.yahoo.com/chart/BZ=F?p=BZ=F you can click the "compare" button and add in the EURUSD chart and you'll see the correlation.
As I said, fuel is the most transparent pricing out there as the main cost is the publicly quoted oil prices, the exchange rate and the excise duty and the vat. The remaining 20c is divvied up between refinery, distributor and retailer. then on top of that, the retailer has to show the prices in lights before you enter.
Now if you go into Woodies - see if you can work out the profit on a tin of paint?
see a few post above for how the fuel price is made up.
Put it this way - I'm in retail. The absolute last type of business I would look at is fuel retail as the margins are miniscule. The shops is where the money is and if the fuel price is not competitive, you won't get people into your shop for that very very profitable cup of coffee.
BTW, the UK is currently £1.28 (€1.49) for petrol and £1.31 (€1.53) for diesel.
Here's the NCA (Now CCPC) report from 2008
PETROL & DIESEL PRICE SURVEY At the request of the Tánaiste and Minister for Enterprise, Trade and Employment, Ms. Mary Coughlan, T.D, a major piece of research into the price of fuel (petrol and diesel) in Ireland was conducted by the in house research function of the Agency during the period September to December 2008.
In the course of the investigation, the Agency: Held discussions with oil companies, distributors, retailers and other relevant parties; Conducted extensive surveys of petrol and diesel prices at the pump and; Analysed wholesale and retail prices in Ireland and compared these with prices for refined product at international level.
The report was submitted to the Tánaiste in December. Key conclusions included: There is little evidence to suggest unwarranted delays in the passing on of wholesale price changes to the consumer at the pump; Direct comparison between fluctuations in crude oil prices and petrol and diesel pump prices is inappropriate and does not reflect the reality of the petrol and diesel supply chain.
To more accurately assess flow through of price changes in refined oil products (such as petrol and diesel) to the consumer, it is necessary to compare fluctuations in Platts prices, these being the prices for refined oil products such as petrol and diesel paid by wholesalers, and prices at the forecourt pump; Overall, Ireland’s service station/retail petrol and diesel supply market would appear to be competitive by international standards.
The density of outlets per capita (1 outlet per 2,020 people) in Ireland compares favourably against corresponding statistics for Northern Ireland (1 outlet per 3,113 inhabitants) and for Great Britain (1 outlet per 9,539 inhabitants). Data is required at the local level to make a definitive statement in this regard; A number of gaps exist in the manner in which information on petrol and diesel prices in Ireland is collected, analysed and made available.
There is clearly scope for enhancement in analysis and reporting, and improvements in this area could serve to better inform consumers of general trends in petrol and diesel prices and to place a sustained spotlight on the competitive environment in this important sector.
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I know about low margins in fuel prices ordinarily. My point is that margin was increased exponentially during the lockdowns
The current UK price for diesel is £1.22 (€1.38)
A report from 2008 has no relevance to my point
While petrol stations do indeed sell large quantities of fuel that may not have high margins of nett profit, the shops contained on the sites of the fuel stations are (usually) well staffed and managed are supposedly the place where the money is made. Anyone care to throw a figure on the margins they end up working off, as in their nett profit? Somehow I feel it's extremely low, with a lot just about surviving, even the very high turnover ones. I'd imagine some have a lot of everyday theft of fuel, ie, in vehicles being driven off and petrol/diesel not paid for. I know cameras pick them up but there's costs involved and a lot more too in following this up. Imagine a customer filling up with say €50 worth of diesel and doing a runner? How much fuel does the owner need to sell just to get that amount back from profit?