Red-Coat
Gold Member
It’s a combination of factors:
The price of crude dropped to an artificial low during the pandemic when travel restrictions cut the demand for fuel. Demand is returning, the price has risen, and Russia’s invasion of Ukraine has hit availability as various (mainly European) countries are no longer buying from them and seeking alternatives. Competition for a narrower choice of supply options inevitably pushes up the price.
The pound has fallen against the dollar and is currently at a low, further pushing up the cost of crude and wholesale prices for petrol. Wholesale and retail prices have in the past typically moved in tandem but refineries are now taking a bigger cut. Although the cost of producing wholesale petrol has fallen for five weeks in a row, the reductions are not being passed on. This is profiteering, leveraged by a reduction in refining capacity in Europe and the east coast of the US.
We have only six major refineries in Britain. In theory, the boom in refining demand should have helped them, but the oil price spike in March inflated their input costs. There’s also a considerable time-lag between any price drop at wholesale level and the effect on pump price for petrol, which is also dependent on the nature of supply contracts.
Although the government cut the duty on fuel by 5p per litre in March, it had almost no effect on pump prices and retailers are being accused of additional profiteering by pocketing the difference. That’s currently under investigation by the Competition and Markets Authority (CMA).
Retailers, and especially supermarkets are to a large extent no longer bothering to compete as hard on pump price to attract customers as in previous years.
One other thing to note. On the current legislative plan, from 2030, the sale of new petrol and diesel cars will be banned in the UK. The sale of some hybrid cars with auxiliary electric power will be allowed to continue until 2035. Whether or not that’s a workable plan remains to be seen but, although it’s improving all the while, we’re still quite a way off having the necessary infrastructure for recharging electric vehicles en masse.
(Note that I’m avoiding any political comment here).
The price of crude dropped to an artificial low during the pandemic when travel restrictions cut the demand for fuel. Demand is returning, the price has risen, and Russia’s invasion of Ukraine has hit availability as various (mainly European) countries are no longer buying from them and seeking alternatives. Competition for a narrower choice of supply options inevitably pushes up the price.
The pound has fallen against the dollar and is currently at a low, further pushing up the cost of crude and wholesale prices for petrol. Wholesale and retail prices have in the past typically moved in tandem but refineries are now taking a bigger cut. Although the cost of producing wholesale petrol has fallen for five weeks in a row, the reductions are not being passed on. This is profiteering, leveraged by a reduction in refining capacity in Europe and the east coast of the US.
We have only six major refineries in Britain. In theory, the boom in refining demand should have helped them, but the oil price spike in March inflated their input costs. There’s also a considerable time-lag between any price drop at wholesale level and the effect on pump price for petrol, which is also dependent on the nature of supply contracts.
Although the government cut the duty on fuel by 5p per litre in March, it had almost no effect on pump prices and retailers are being accused of additional profiteering by pocketing the difference. That’s currently under investigation by the Competition and Markets Authority (CMA).
Retailers, and especially supermarkets are to a large extent no longer bothering to compete as hard on pump price to attract customers as in previous years.
One other thing to note. On the current legislative plan, from 2030, the sale of new petrol and diesel cars will be banned in the UK. The sale of some hybrid cars with auxiliary electric power will be allowed to continue until 2035. Whether or not that’s a workable plan remains to be seen but, although it’s improving all the while, we’re still quite a way off having the necessary infrastructure for recharging electric vehicles en masse.
(Note that I’m avoiding any political comment here).
