Petrol prices- when does the madness end?
Discussion
Megaflow said:
RazerSauber said:
MSN reporting June's petrol sales took a 4.3% hit as prices were at the peak.
Link
Had a knock on effect on other shopping habits too. At least fuel is heading in the right direction.
4.3% petrol reduction presumably meant people reducing travel but nobody seemed to notice it. I certainly didn't when stuck in the usual traffic jams.
The only surprise with that is the reduction was only 4.3%Link
Had a knock on effect on other shopping habits too. At least fuel is heading in the right direction.
4.3% petrol reduction presumably meant people reducing travel but nobody seemed to notice it. I certainly didn't when stuck in the usual traffic jams.
ie, If you sell £10 worth of fuel at £1 per litre, then six months later you sell another £10 worth of fuel at £1.50 per litre, your sales volume has dropped by roughly 35% even though your sales value has remained static.
DonkeyApple said:
CarCrazyDad said:
To be fair isn't around £1.50 now with inflation not actually much if any more expensive than the days of 99P ?
It's hard to correctly factor the impact of inflation as all major currencies have printed such vast amounts of new capital since 2009. What is easier to see is that the GBP has plummeted against the USD over that period from being almost $2 to £1 to today where we are facing potential parity. In addition to that significant rise in the cost of the underlying there has been the significant addition of eco costs throughout and then there are the magic additives that force you to buy from one brand over another for almost no logical reason. But the quickest solution to many pricing issues is often transparency. Forcing retailers to publish on their boards an average wholesale price from the refineries that day along with the price of Brent would work wonders in getting consumers to develop a more natural understanding of pricing, inhibit any element of the industry from mucking about and equally importantly, disarming the tinfoil vendors who prey on the mentally feeble and mentally bone idle.
Desiderata said:
That'll probably be 4.3% by sales value rather than volume. If you consider that the price has gone up by over 50%, even a static sales value would mean a substantial sales volume drop.
ie, If you sell £10 worth of fuel at £1 per litre, then six months later you sell another £10 worth of fuel at £1.50 per litre, your sales volume has dropped by roughly 35% even though your sales value has remained static.
That would make more sense and align with the other sales by value figures further on in the article. Would highlight the known and enormous elasticity in car usage. ie, If you sell £10 worth of fuel at £1 per litre, then six months later you sell another £10 worth of fuel at £1.50 per litre, your sales volume has dropped by roughly 35% even though your sales value has remained static.
People on this thread have posted concerns that evil vendors will now know they can charge more money and work in collusion to destroy all humans but the actual danger when we get fuel price hikes is that the population reveal to the Govt the current levels of elasticity.
DonkeyApple said:
...but the actual danger when we get fuel price hikes is that the population reveal to the Govt the current levels of elasticity.
And just how much tax revenue can be extracted from the motorist without jeopardising the economy. Lots of opportunity there, it seems £££ 
bigothunter said:
DonkeyApple said:
...but the actual danger when we get fuel price hikes is that the population reveal to the Govt the current levels of elasticity.
And just how much tax revenue can be extracted from the motorist without jeopardising the economy. Lots of opportunity there, it seems £££ DonkeyApple said:
It's not just about tax but more vitally about policies to push people out of cars. The more elasticity is revealed the more emboldened those policy activists can be.
Pricing motorists out of their cars is a very effective policy. More tax but less cars. Win-win for the government...Desiderata said:
Megaflow said:
RazerSauber said:
MSN reporting June's petrol sales took a 4.3% hit as prices were at the peak.
Link
Had a knock on effect on other shopping habits too. At least fuel is heading in the right direction.
4.3% petrol reduction presumably meant people reducing travel but nobody seemed to notice it. I certainly didn't when stuck in the usual traffic jams.
The only surprise with that is the reduction was only 4.3%Link
Had a knock on effect on other shopping habits too. At least fuel is heading in the right direction.
4.3% petrol reduction presumably meant people reducing travel but nobody seemed to notice it. I certainly didn't when stuck in the usual traffic jams.
ie, If you sell £10 worth of fuel at £1 per litre, then six months later you sell another £10 worth of fuel at £1.50 per litre, your sales volume has dropped by roughly 35% even though your sales value has remained static.
Roman Rhodes said:
DonkeyApple said:
Jawls said:
That’d be a pretty busy pole sign!
Maybe bit cost transparency really helps with price competition and preventing blame diversion. Even within this thread you have repeatedly referenced Platts pricing yet never published any numbers so almost no one has listened. Hence why I've used the less precise Brent pricing and published that data.
We also now have an enquiry into that wholesale pricing in the U.K. to establish what the domestic refineries have been competing against because as you well know local and global pricing competition are actually two different things that may not correlate or have a reason to.
A further example of the benefit of data transparency lies in the current retail disparity of some vendors quoting as low as 1.66 while others are still in the 1.90s
Price opacity is always bad for the consumer whether fiscally or politically and what you can see categorically at work in this thread is that lack of transparency leading to a political foment.
I’ve no dog in the transparency race, just think it’s peculiar to apply it to one industry and not others just do to tinfoil hattery. OMG why don’t Tesco put the wheat price next to the bread. It’s a conspiracy by Big Flour!
To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
Ardennes92 said:
162.9 (essar) and 167.9 (shell) here in North Shropshire yesterday; probably both from Stanlow as that is closest and sold by shell to essar a few years ago
I think it's starting to bottom out to what the price "should be" with some retailers - around £1.60/l seems to be the price. Jawls said:
I’ve no dog in the transparency race, just think it’s peculiar to apply it to one industry and not others just do to tinfoil hattery. OMG why don’t Tesco put the wheat price next to the bread. It’s a conspiracy by Big Flour!
To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
Another way to look at it is this:To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
The current wholesale price is 132p which includes the 53p fuel duty levy. You then have the VAT levied by the retailer so the current U.K. net pump price is 158p.
That's quite a simple number to publish.
Currently in the retail space we have, on this thread, a potential low of 162 and most of us can still see vendors selling in the 190s.
Now some of that elevated pricing could be explained by either a particular station having very low sales volumes so tanks full of old fuel or a buying mechanism that locked in a previous, much higher price and that needs to work through but the speed at which retail prices rise quite overtly suggests that either this is not at all common practice or that the retailers all collectively front run on spot. The latter would require systemic collusion so doesn't seem likely.
What seems more likely on the retail side is that individual vendors, within a practical spread, manipulate their pricing to attract or push away sales or to absorb what the local passing traffic will willingly pay as premium in exchange for not having to shop around or think about pricing. That is perfectly fair and good business. No sane person would begrudge a retail business that exists to make profit from doing so. However, if that figure of 158p was overtly published on the pricing board then it would have a material impact on the willingness of the end consumer to pay that premium. And that is a really good thing.
Quite a good example of this sort of effect in action was seen in the retail physical fx market. The spreads to the end consumer were monumental until spot pricing became wholly transparent to all consumers. Almost overnight the retail spreads came in. Even the desks at the post office and air ports which had customers who simply didn't care about the price premium felt the need to bring their spreads in by huge amounts. They still charge a massive premium for the benefit of physically passing cash over the counter but it's a fraction of what it was because of wholesale transparency even though their customers don't care. Meanwhile all the price sensitive consumers have migrated to much cheaper services.
This isn't saying that somehow petrol vending will miraculously go digital and price a penny from spot but rather it's highlighting the known principle and a principle that sits behind a very large amount of retail financial regulation, that transparency to retail of wholesale pricing creates more efficient retail pricing, improves competition and can even stimulate business progress.
Take the case of two Essar stations. My local one currently selling at 190p and the poster's above selling at 162p. Both while the post VAT wholesale is 158p.
By publishing that 158 level important questions are subsequently raised that are of huge benefit to end consumers. It's the path to clarity on pricing differentials either between retail outlets, fuel distributors or fuel refineries. And that clarity will improve competition and so pricing. It would also potentially add weight to progressive fuel duty levies based on the geographic location of the end retailer where there is the socio economic issue of petrol tending to be more expensive where the poorest have to drive or drive more.
Do we currently know the specific reason for the almost 30p/L retail price differentials that we are currently witnessing? No. We're all going to have to wait for the State review. We don't know if refiners were levying a premium on the back of global pricing issues which didn't actually affect the U.K. as we produce domestically so had no need to bid on the open market like importers had to. We don't know if retailers have been being sticky on the way down having been rapid on the way up. But what we do know is that if there had been wholesale price transparency then firstly these questions would have been raised sooner and more vociferously but we could also potentially hazard that they may not have arisen in the first instance as there would not have been the intellectual gap to facilitate.
Dog Star said:
Ardennes92 said:
162.9 (essar) and 167.9 (shell) here in North Shropshire yesterday; probably both from Stanlow as that is closest and sold by shell to essar a few years ago
I think it's starting to bottom out to what the price "should be" with some retailers - around £1.60/l seems to be the price. The old adage used to be that the vendor adds 12p so up that to 15 or a little more to reflect rising operational costs and it might be that the mid 170s would be a fair value currently.
The real question to be asked is that as underlying oil prices have been sitting for some time now between $100-110 what is it that has suddenly facilitated such a huge drop and why is it only at specific locations?
The other question to ask is why do domestic refiners sell domestically at global importing offer pricing? The answer is that it is because they can but would we not be wise to ask if they should?
Obviously, the U.K. is exposed to this global pricing of wholesale fuel for the 10-20% of diesel we import but what is the mechanism that causes imported Brent Crude that is subsequently refined domestically and sold domestically? Is it needed? Is it beneficial? And should we seek to change?
DonkeyApple said:
The other question to ask is why do domestic refiners sell domestically at global importing offer pricing? The answer is that it is because they can but would we not be wise to ask if they should?
Obviously, the U.K. is exposed to this global pricing of wholesale fuel for the 10-20% of diesel we import but what is the mechanism that causes imported Brent Crude that is subsequently refined domestically and sold domestically? Is it needed? Is it beneficial? And should we seek to change?
Good comments before about the spread on pole signs, and good analogy with consumer FX. Obviously, the U.K. is exposed to this global pricing of wholesale fuel for the 10-20% of diesel we import but what is the mechanism that causes imported Brent Crude that is subsequently refined domestically and sold domestically? Is it needed? Is it beneficial? And should we seek to change?
With respect to the questions above, gasoline might be sold at a discount to Platts on the domestic market given the refiners have a surplus and exported barrels of gasoline components incur additional costs (freight to north Africa or America or wherever). It’s the total return on a supply deal that will be assessed, so you can lose money on the gasoline and make money on the diesel so long as the deal as a whole washes its face.
As for domestically refined diesel vs imported diesel, refineries will optimize based on what the marginal barrel costs to produce/import. So your marginal diesel barrel will be more expensive since you have to import it. But if either crack spreads are favourable or it allows you to evacuate more gasoline (which you’ve got too much of, and if you can’t get rid of it your refinery runs out of tankage), that doesn’t matter.
Edited by Jawls on Thursday 28th July 12:07
DonkeyApple said:
Jawls said:
I’ve no dog in the transparency race, just think it’s peculiar to apply it to one industry and not others just do to tinfoil hattery. OMG why don’t Tesco put the wheat price next to the bread. It’s a conspiracy by Big Flour!
To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
Another way to look at it is this:To do it for fuel, you’d need to do it in a way that doesn’t give away any competitive information. So you couldn’t, for example, put what was actually paid as you could backcalculate premiums etc from that.
So you would end up with something like the daily 95 BOB quote (“OMG what’s BOB” says Joe Public, “I’m so confused!”), an ethanol quote, a 10ppm gas oil quote, and a FAME quote (OMG what’s FAME, I’m so confused!). Is that especially illuminating for the customer.
Or you take the above, manipulate it so that what gets shown is 90%BOB,10% Ethanol and 93% gasoil, 7% FAME multiplied by whatever the previous day’s FX rate is. But that still doesn’t show exactly what the site will have paid, as the price formulas will have a bunch of other stuff in them around various environmental levies etc. So you still get confused punters.
You’ve seen it in this thread. Despite having it explained to them by people who are clearly industry, tinfoilers keep thinking it’s some kind of conspiracy.
Edit: and on topic, the Esso site I walk past everyday has dropped about 10p each grade over the last fortnight.
The current wholesale price is 132p which includes the 53p fuel duty levy. You then have the VAT levied by the retailer so the current U.K. net pump price is 158p.
That's quite a simple number to publish.
Currently in the retail space we have, on this thread, a potential low of 162 and most of us can still see vendors selling in the 190s.
Now some of that elevated pricing could be explained by either a particular station having very low sales volumes so tanks full of old fuel or a buying mechanism that locked in a previous, much higher price and that needs to work through but the speed at which retail prices rise quite overtly suggests that either this is not at all common practice or that the retailers all collectively front run on spot. The latter would require systemic collusion so doesn't seem likely.
What seems more likely on the retail side is that individual vendors, within a practical spread, manipulate their pricing to attract or push away sales or to absorb what the local passing traffic will willingly pay as premium in exchange for not having to shop around or think about pricing. That is perfectly fair and good business. No sane person would begrudge a retail business that exists to make profit from doing so. However, if that figure of 158p was overtly published on the pricing board then it would have a material impact on the willingness of the end consumer to pay that premium. And that is a really good thing.
Quite a good example of this sort of effect in action was seen in the retail physical fx market. The spreads to the end consumer were monumental until spot pricing became wholly transparent to all consumers. Almost overnight the retail spreads came in. Even the desks at the post office and air ports which had customers who simply didn't care about the price premium felt the need to bring their spreads in by huge amounts. They still charge a massive premium for the benefit of physically passing cash over the counter but it's a fraction of what it was because of wholesale transparency even though their customers don't care. Meanwhile all the price sensitive consumers have migrated to much cheaper services.
This isn't saying that somehow petrol vending will miraculously go digital and price a penny from spot but rather it's highlighting the known principle and a principle that sits behind a very large amount of retail financial regulation, that transparency to retail of wholesale pricing creates more efficient retail pricing, improves competition and can even stimulate business progress.
Take the case of two Essar stations. My local one currently selling at 190p and the poster's above selling at 162p. Both while the post VAT wholesale is 158p.
By publishing that 158 level important questions are subsequently raised that are of huge benefit to end consumers. It's the path to clarity on pricing differentials either between retail outlets, fuel distributors or fuel refineries. And that clarity will improve competition and so pricing. It would also potentially add weight to progressive fuel duty levies based on the geographic location of the end retailer where there is the socio economic issue of petrol tending to be more expensive where the poorest have to drive or drive more.
Do we currently know the specific reason for the almost 30p/L retail price differentials that we are currently witnessing? No. We're all going to have to wait for the State review. We don't know if refiners were levying a premium on the back of global pricing issues which didn't actually affect the U.K. as we produce domestically so had no need to bid on the open market like importers had to. We don't know if retailers have been being sticky on the way down having been rapid on the way up. But what we do know is that if there had been wholesale price transparency then firstly these questions would have been raised sooner and more vociferously but we could also potentially hazard that they may not have arisen in the first instance as there would not have been the intellectual gap to facilitate.
If the "specific reason" for 30ppl differentials is "f
k you, I'll sell my goods for whatever price I like", what are you going to do?Gassing Station | General Gassing | Top of Page | What's New | My Stuff