Why are we paying 1.50 for petrol

martinn123

Hi all

a question that has been annoying me lately. Why do petrol/diesel prices immediately rise if there is trouble in Libya.

Heard a bloke on news last night banging on about the rising price of crude oil.OK.

But if the petrol in the pumps was bought yesterday from Libya,/Saudi etc. I could understand the increase.

In fact crude oil is purchased, transported, refined, and then sold to Petrol Retailers, this I am sure takes a few months, so the petrol we are buying today was bought as crude some months ago.

So why can retailers use todays crude oil prices to justify an increase in petrol.

Surely this is a rip off.

If there is a sound reason for this can someone enlighten me

thanks

stephendevlin

martinn123 wrote: »

Hi all

a question that has been annoying me lately. Why do petrol/diesel prices immediately rise if there is trouble in Libya.

Heard a bloke on news last night banging on about the rising price of crude oil.OK.

But if the petrol in the pumps was bought yesterday from Libya,/Saudi etc. I could understand the increase.

In fact crude oil is purchased, transported, refined, and then sold to Petrol Retailers, this I am sure takes a few months, so the petrol we are buying today was bought as crude some months ago.

So why can retailers use todays crude oil prices to justify an increase in petrol.

Surely this is a rip off.

If there is a sound reason for this can someone enlighten me

thanks

Someone already has a thread about this ... couple of days ago:D

martinn123

Oops sorry.........please delete Mods

91011

Here's a great article that explains a lot

http://finance.yahoo.com/news/Gas-prices-are-about-more-apf-3196097583.html?x=0&sec=topStories&pos=3&asset=&ccode=
BTW retailers make an average of 6c on each litre - this pays for rent rates, staff etc etc etc.

They hate the higher prices as people drive less, make less visits and buy less bottles of coke & chicken sandwiches, which is where the money is made.

visit www.pumps.ie and this will explain the pricing process.

And btw - expect another 3c next week and then it may start falling back (oil prices dropping a little today) as there's a 2 week lag from oil price rise to pump price rise and most busy stations get 3 deliveries a week, hence prices can change 3 times a week.

Pablo Sanchez

Tax (carbon levy, vat, excise) make up about 70% of the price per litre, the new government could forgoe some of this should they choose.......but dont hold your breath.

MASTER...of the bra

91011 wrote: »

And btw - expect another 3c next week and then it may start falling back (oil prices dropping a little today) as there's a 2 week lag from oil price rise to pump price rise and most busy stations get 3 deliveries a week, hence prices can change 3 times a week.

2 week lag from oil price drop to pump price drop and 2 second lag from oil price rise to pump price rise more like.

eas

I can't recall the numbers exactly and am open for correction, but as I remember at the height of the last surge in oil prices a barrel went over €150 but the highest I seem to remember seeing a the pumps was €1.28 & the country nearly came to a halt with the uproar. Now oil is at €118 a barrel and even with the 12c tax added to petrol over the past couple of years there seems to leave a significant gap there?

91011

MASTER...of the bra wrote: »

2 week lag from oil price drop to pump price drop and 2 second lag from oil price rise to pump price rise more like.

Our eyes may think this as we're more likely to notice a negative than a positive, but for over 2 years pumps.ie have been forecasting the 2 week price both upwards and downwards and both ways take about 2 weeks. - This is based on 100% factual pricing entered by hundreds of motorists nationwide and forecast prices are based on published refinery prices.

The extra increase you will see this weekend is from the jump in oil prices at the very start of March. The current small decreases from yesterday and today will then bring this weekends price increase back to todays level in about 2 weeks.

jett

You will find there have been 2 "carbon taxes" in the last 2 budgets, all plus VAT.
The greens are blamed, but now they are gone.
All it needs is for people to lobby their TD about this and any other thing that is wrong.

StudentDad

Well, thanks to the price of petrol I've pretty much stopped driving. Apart from shopping runs etc., where I need the car.

SD

royston_vasey

The price of a barrel of oil only gives some indication as to the price the motorist will have to pay. The actual price of oil is determined by the number of future/swap contracts that are involved from when the oil is extracted to when it actually hits the forecourt.

The average number of contracts now stands at about 22 compared with about 13 ten years ago hence there are now another 9 contracts all adding a margin along the way. So just comparing the price of a barrel of oil and adding government levies won't always explain away the rise in petrol prices.

jett

Tell me why:-
when a barrel of crude went $150+ the price per Litre was about E1.25.
Now its about E100 the price is E1.50+
The answer is the extra taxes and pure rip off by speculators.
Remember it crashed to $36 two years ago and the government used the low price to bump up taxes.
I have written to my TD telling him that the cost is destroying the ecconomy and the returns are now diminishing because you cannot get blood out of a stone. He agrees but nothing will be done unless people complain in a rational way.

super_furry

How much of that €1.50 is made up of tax?

tweedledee

tax tax and more aint living in Ireland great, TAX!!!

MASTER...of the bra

Petrol
Current average petrol price: 149.9
Current Vat: 26.02c/litre
Fixed Duty: 59.622c/litre
Government take: 85.64c/litre
Cost before tax & duty: 64.26c/litre Retailer
Distributor margin (est): 11c/litre
Base petrol price (est): 53.26

Diesel
Current average diesel price: 145.9
Current Vat:25.32c/litre
Fixed Duty:48.57c/litre Government take:73.89c/litre
Cost before tax & duty:72.01c/litre Retailer
Distributor margin (est):11c/litre
Base diesel price (est):61.01

Some retailers are making a nice few quid selling fuel.

Link to pumps.ie

jett

Petrol engines are more efficient maintainace/cost wise but burn more fuel.
Diesel engines are less efficient maintainance/cost wise but burn less fuel, However their construction costs more ( thus incuring more fuel making and maintaining the thing) Look at the control and associated hardware cost.
IN GENERAL ( shouts)
So the goverment taxes petrol higher in direct contradiction of the UK goverments taxation system ( who is right?)
Whatever the experts say I think diesel is more polluting particulate size wise.
The excuse for higher petrol duty is wait for it, and the winner is..carbon pollution tax.
A tiny country, with a small population trying to save the planet with the Likes of USA, China and Japan ( up to this week) burning as much as they can grab and charging little tax.
Cowan bleated on about reducing car tax for low emmision state of the art cars and that the goverment would loose revenue, he said that the loss of tax was worth saving the planet. Then he puts up the road tax for every other poor sod who has a perfectly reasonable petrol engined car.
It mean't that certain members of society that could afford a damn great supposed green car could tax it for less and the rest who were killing the planet could just put up with it.
Great if you live in the Cities but a bugger for those in the sticks who need a 20 mile round trip for shopping.

Pacing Mule

MASTER...of the bra wrote: »

Petrol
Current average petrol price: 149.9
Current Vat: 26.02c/litre
Fixed Duty: 59.622c/litre
Government take: 85.64c/litre
Cost before tax & duty: 64.26c/litre Retailer
Distributor margin (est): 11c/litre
Base petrol price (est): 53.26

Diesel
Current average diesel price: 145.9
Current Vat:25.32c/litre
Fixed Duty:48.57c/litre Government take:73.89c/litre
Cost before tax & duty:72.01c/litre Retailer
Distributor margin (est):11c/litre
Base diesel price (est):61.01

Some retailers are making a nice few quid selling fuel.

Link to pumps.ie

Whereabouts in your figures are the retailers making a "nice few quid" selling fuel. You've actually left no profit element at all for them. The link actually has it as distributor and retailer margin at 11c/ litre. To explain that 11c equats to approx 15% margin which would normally breakdown at 10% to the distributor and approx 5% to the garage. When you throw in the credit card processing fees that most fuel transactions would involve your local garage is rarely making a nice few quid at all on fuel. They make more on sandwiches and cokes etc than on the fuel.

eas

Pageant Messiah wrote: »

They make more on sandwiches and cokes etc than on the fuel.

how many thousands of liters of coke do they sell in a day?

Honestly, I've heard that rhetoric so often. I have no idea what profit they make on fuel at the pumps, I've heard 6 cents as an average. If that's true then IMO it seems like pretty good earner looking in from the outside. Let's face it, if there wasn't good money in it, there'd be far fewer stations.

Pacing Mule

eas wrote: »

how many thousands of liters of coke do they sell in a day?

Honestly, I've heard that rhetoric so often. I have no idea what profit they make on fuel at the pumps, I've heard 6 cents as an average. If that's true then IMO it seems like pretty good earner looking in from the outside. Let's face it, if there wasn't good money in it, there'd be far fewer stations.

6 cents per litre if accurate = €2.06 profit on a €50.00 fill - on a €20 fill it's less than €1.00 - I've no idea what the average fill is to be fair but I'd imagine it is south of the €50.00

A Sandwich and Coke retailing at €5.00 would have as much as €3.00 profit on it.

eas

No offense Pageant Messiah, but unless you run a petrol station, or have insider information on running a petrol station I'm not going to be convinced by your sandwich & Coke being more profitable than petrol theory.

Pacing Mule

15 years experience in fresh foods / grocery management - the figures for a sandwiches and coke etc I can 100% stand over.

The petrol figures I am going from anectodal / other retail professionals stories. I haven't personally seen an invoice from a petrol wholesaler but I am very confident that the figures I have used (which you yourself put forward btw) for petrol margins are reasonably accurate.

borderlinemeath

You don't need to be in retail to know that the average deli sandwich has a huge mark up.

Look at the price of a sliced pan compared to the two slices of bread in your sandwich, same principle applies to the ham, salad, whatever.
And then remember that the deli actually pays the cost price of a catering pan, ham, salad etc..

eas

I don't doubt the margins on the sandwich and Coke, I just highly doubt they make up more profit on a whole than petrol.

The 6c/ltr figure I used was read either on this thread or another thread of similar topic. Thinking about it, seeing as how there's more than a 10c spread on pump prices around the country, I'm thinking that 6c may be a modest estimate. But again, I'm just a guy making guesses.

Pacing Mule

borderlinemeath wrote: »

You don't need to be in retail to know that the average deli sandwich has a huge mark up.

Look at the price of a sliced pan compared to the two slices of bread in your sandwich, same principle applies to the ham, salad, whatever.
And then remember that the deli actually pays the cost price of a catering pan, ham, salad etc..

Indeed and then a bottle of coke costs circa €0.80 verus a €1.40 - €1.50 in most garages and you can see why a sandwich and coke makes quite a high margin. A very high margin €5.00 sale can dwarf a €50.00 low margin sale in profit terms which is the point I am making.

kippy

royston_vasey wrote: »

The price of a barrel of oil only gives some indication as to the price the motorist will have to pay. The actual price of oil is determined by the number of future/swap contracts that are involved from when the oil is extracted to when it actually hits the forecourt.

The average number of contracts now stands at about 22 compared with about 13 ten years ago hence there are now another 9 contracts all adding a margin along the way. So just comparing the price of a barrel of oil and adding government levies won't always explain away the rise in petrol prices.

This speculation, together with the taxation are where the real problems lie.
I would hazard a guess that many "investors" including pension funds may have gotten involved in these markets since the banking sector (worldwide) collapsed.
I dont think we'll see anything done about the speculation, as there are too many vested interests but the taxation could at least be tackled on one level.

Pacing Mule

eas wrote: »

I don't doubt the margins on the sandwich and Coke, I just highly doubt they make up more profit on a whole than petrol.

The 6c/ltr figure I used was read either on this thread or another thread of similar topic. Thinking about it, seeing as how there's more than a 10c spread on pump prices around the country, I'm thinking that 6c may be a modest estimate. But again, I'm just a guy making guesses.

I think you could put that spread down to the wholesale cost prices.

As was linked to in the OP 11 cent of the €1.45 average sale price per ltr is the profit element of the distributor / wholesaler and the retailer. Even if that was a 9cent to retailer and 2 cent to distributor split the €50.00 fuel fill would equate to the same profit level as a sandwich and coke. (and that split is highly unlikely)

I'm not saying that the profit on sales of sandwiches and coke alone outweigh the profit on sales of fuel - it's a broader spectrum than that. The profit on a coffee dwarfs the profit on a coke, not everyone would buy a sandwich, someone might buy a box of cornflakes etc What I am saying is that in general the profit made on sales within the store itself dwarfs the profit made on fuel sales.

Of course you will have garages who will add on extra onto the fuel rates and offer little to none other goods / services that's a business model in it's own right but the again the vast majority of service stations are geared to make their profits on shop sales.

eas

Pageant Messiah wrote: »

They make more on sandwiches and cokes etc than on the fuel.

:rolleyes:

Pacing Mule

Well that's a fantastic contribution to the debate.

eas

true, but I'm tired now.;)

Honestly, I'm not looking to debate on speculation and that's all I have. Respect to your experience and background, but without knowing the details of volume of sales & exact profit numbers it's pointless.

Mainly - I've heard the sandwich & Coke comment before, and I don't think it's fair to people whos livelihoods are at risk because we're paying tooth and eye for petrol.

edit - for what it's worth, i don't blame the owners at the stations for making profits on petrol...I blame the government for not regulating it in the first place.

Pacing Mule

eas wrote: »

edit - for what it's worth, i don't blame the owners at the stations for making profits on petrol...I blame the government for not regulating it in the first place.

/insert your own facepalm here

The cost at the pumps is primarily government / tax driven. Frankly I blame the government for not putting in place a flexible taxation mechanism that does not reward the goverment exponentially as the price of oil rises.

eas

sure, maybe it should have read "regulating correctly in the first place"

cgarrad

At 53.26c a litre petrol is a bargain. It's cheaper than Coke, milk and orange juice yet multiple times more useful.

Tax puts up the price but people have it in their heads that it's greedy financiers.

As usual the root of the problem is government but you have all been deflected by their spin.

We are going to default if oil stays at €100-€120 due to no growth.

Blame whoever but it's politicians fault plain and simple.

jett

all means that british chancellor Norman Lamont was right when he said back in the early 90s " tax is so high that it now brings in diminishing returns" Or words to that effect.
not forgetting that the Oil companies profit goes up thus the goverment Makes more on corporation tax.
6 years ago petrol was 20% cheaper here than in the UK. Now its the same.
That means the government is charging more tax than before.
The politicians claim their travelling expenses at the cost of the taxpayer.
The taxpayer pay their own travelling costs at full rate.
Think about it!

Danno

The govt should 0% VAT fuel, remove carbon taxes and charge excise duty at a set rate per litre.

If mad-mahullah out in some sand dune decides to blow the bejaysus out of some pipe line and the price of a barrel goes up, then the govt don't get a sweet little extra earner on account of it.

This policy needs to be EU-Wide also.

Alun

Danno wrote: »

The govt should 0% VAT fuel, remove carbon taxes and charge excise duty at a set rate per litre.

They already do!!! See the Revenue website if you don't believe it.

sandin

eas wrote: »

I don't doubt the margins on the sandwich and Coke, I just highly doubt they make up more profit on a whole than petrol.

The 6c/ltr figure I used was read either on this thread or another thread of similar topic. Thinking about it, seeing as how there's more than a 10c spread on pump prices around the country, I'm thinking that 6c may be a modest estimate. But again, I'm just a guy making guesses.

I know someone that has a fuel station and their current "profit" on a litre of petrol is 3c. On Diesel its 4c. They currently sell petrol at 1.49.9 and diesel at 1.44.9
The only reason he's selling fuel is to get people into his shop to buy anything from newspapers to beer. 1% Credit card charge takes 1.5c, leaving 1.5c for all other costs associated with the fuel.

Without the fuel, he'd have very few customers, so he sees it as simply a way of getting footfall into the store.

btw - he hates the high prices as much as anyone else as people are driving less and therefore visiting him less, and so less chances to sell a bottle of coke / sandwich.

And yes there is more "Gross Profit" in sandwiches, but you need to factor in staff, food wastage, food regulations etc and the bread used for commercial sandwiches is more expensive than normal bread. (Its heavier & denser in order to keep shape), but still this and confectionery & soft drinks is where he makes the money to pay for staff, rent etc.

sandin

Danno wrote: »

The govt should 0% VAT fuel, remove carbon taxes and charge excise duty at a set rate per litre.

If mad-mahullah out in some sand dune decides to blow the bejaysus out of some pipe line and the price of a barrel goes up, then the govt don't get a sweet little extra earner on account of it.

This policy needs to be EU-Wide also.

The only variables in the fuel price is cost from refinery & vat. Everything else remains relatively static.

kippy

sandin wrote: »

The only variables in the fuel price is cost from refinery & vat. Everything else remains relatively static.

The problem is, that static is a percentage. And some of the taxes are taxes on taxes.
A one cent rise in a litre of petrol from the refinery will lead to a 3 cent rise at the pumps.

Alun

It's also worth mentioning that the cost from the refinery of the petrol that goes into your tank doesn't follow the spot price of crude oil as faithfully as some feel it ought to. There's refining costs, currency fluctuations, transport costs to take into account, but also the fact that to protect themselves against short term fluctuations all kinds of complex futures buying and currency hedging goes on on the markets which complicates matters enormously.

Alun

kippy wrote: »

The problem is, that static is a percentage. And some of the taxes are taxes on taxes.
A one cent rise in a litre of petrol from the refinery will lead to a 3 cent rise at the pumps.

The duty on fuel is a fixed amount per litre not a percentage.

kippy

Alun wrote: »

The duty on fuel is a fixed amount per litre not a percentage.

Fair point.
http://www.ipia.ie/Issues/upload/What_determines_pump_prices.pdf
A fairly good outline of fuel prices - probably posted before.

Alun

Which means that a 1c increase in petrol prices at the refinery gates (i.e. NOT spot crude oil prices!) will result in a price increase of 1.21c, not 3c.

kippy

Alun wrote: »

Which means that a 1c increase in petrol prices at the refinery gates (i.e. NOT spot crude oil prices!) will result in a price increase of 1.21c, not 3c.

You got me.

Alun

kippy wrote: »

You got me.

Now, spread the word.

kippy

Alun wrote: »

Now, spread the word.

Cheers for the clarification.
So the only variable tax on fuel is the VAT rate?

Pacing Mule

kippy wrote: »

Fair point.
http://www.ipia.ie/Issues/upload/What_determines_pump_prices.pdf
A fairly good outline of fuel prices - probably posted before.

Interesting footnote to that is the amount of garage closures in recent years.

Alun

kippy wrote: »

Cheers for the clarification.
So the only variable tax on fuel is the VAT rate?

Yes.

However one thing not to forget is that there is a difference between the cost of petrol at the refinery gates and crude oil prices. Refinery costs, seasonal demand, transport costs, currency fluctuations, commodity market vagaries and a whole raft of complex financial instruments (futures, currency hedging etc.) designed to reduce the effects of changes in these factors, all conspire to mean that a 1c change in crude prices (up or down) doesn't result in an equal corresponding increase or decrease in the cost of the final product, i.e. petrol or diesel. So a 1c increase in the cost of crude could possibly result in a larger increase in the final cost of the fuel at the forecourt.

sandin

Fixed = 59.6c made up of duty, National reserves agency levy, Carbon tax. + 21% Vat on this.

Fixed = distribution cost / retailer margin. Estimated at a combined 10c + Vat

Fixed (within a cent or so depending on demand & seasonal factors) = cost of refining oil into petrol. Estimated at approx 6c per litre + vat on that

Only Variable = cost of raw material. Currently $112 per barrel. (49c)

So if oil rose by $10, the pump price would rise by approx 4.8c + vat (5.8c)

If oil dropped tomorrow by $10, the forecourt price would only drop by 5.8c.

If oil doubled in price tomorrow, the pump price would only increase by 58c, not €1.50.

Hopefully, this clears a lot up for many.

PDD

Its quite simple, the first is carbon bull**** which I think accounts for something like 15c for every litre which I think is absolute lunacy and for my part I want to know just where that money is going. (Im not getting into any kind of discussion regarding anthroprogrenic global warming scam everyone is entitled to their opinion)

Secondly as you've seen the figures above a greedy government, who introduced VAT increases on petrol/diesel during the boom times while no one cared cos the money was there to pay for it. Now the government is strapped for cash and they are totally dependent on income from these high taxes.

All you have to do is look at their deals with NTR and the M50 toll bridge, it is in the contract that the government at any time can reduce the toll fee to whatever they wish (including nothing) but they don't do it because they get NTR to be the public bad guys while they take 50% of the income from tolls. Even long long after bridges have paid for themselves several times over. And yet again citizens are left paying all of these stealth taxes because previous governments decisions regarding economic policy and the moronic decision to assume bank debt as soverign debt has left this governement dependent on all of these types of revenue to stay afloat.

sandin

PDD wrote: »

Its quite simple, the first is carbon bull**** which I think accounts for something like 15c for every litre which I think is absolute lunacy .

Its approx 4c / litre

as for "greedy government" and "stealth taxes", basically we're still not collecting enough. If it comes off fuel, its added on somewhere else.

Also, all taxes in Ireland are Universal Taxes, so fuel tax isnt reserved for motoring, cigarette taxes isn't reserved for health etc.


Maybe cut the unemployment benefit to the UK level of €75? - But that would be unfair to those who can't find a job.

Maybe cut the pension to UK levels of €100, but that would be unfair to pensioers who have paid taxes all their lives

Maybe charge school fees to everyone - but then we'd have a more poorly educated workforce and we'd really be in the crapper in a few years.

We do pay for all of the above, but in a piecemeal manner over many years via taxes. Its not greedy government, its simply the cost of what the state provides for us.

juuge

There's a garage near James Street in Dublin and today he's selling diesel @ 139.9 our local garage in wicklow is selling today @ 149.9. One garage has queues outside and the other doesn't now which is the better business man?