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In an earlier thread HJ indicated that diesel was more expensive in the winter due to the increased demand for home heating oil. However, the price of home heating oil has just fallen by almost 20% with no reduction in the price of diesel. Any one any ideas?
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Diesel is consistently cheaper than petrol on the continent, and requires less energy to refine, so why is ours more expensive? Oil companies making big profits is why - they think they can get away with it because of our high tax regime. We just blame the govt.
Chris
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The oil companies profits mainly come from the "upstream" activities of producing and refining huge volumes.
The high cost in the UK comes simply from the high tax which Uncle Gordon levies. Petrol and diesel both come out of the refinery at about 20p per litre, about the same price as budget lemonade.
On the continent the overall tax on road fuels is lower, but diesel is subject to less tax than petrol, whereas in the UK the tax is the same on both.
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In Germany for the first time ever diesel has outsold petrol 28million tonnes of petrol and 28.5 million tonnes of diesel,if this were to be used as a measure of economic activity the uk is sliding into a downturn.The price has gone down for the third week running now available at 1.42dm and bio at 1.28.I find it also ironic that Germany does not use its own oil reserves but imports 100% of its usage and yet it still cheaper than an island sat on massive energy reserves
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The high rate of tax on fuel in the UK means that the oil companies can increase prices without having a big effect on sales. The marginal effect on the consumer of a 1p rise on a litre at 80p is at least half what it is on a litre at 40p. Presumably this only works up to a certain level, at which point people will give up and walk. But given that car use is increasing, we haven't reached it yet. Our high rate of tax makes it easier for the oil companies to respond to changes in the price of oil. So although they'll be more willing to raise the price than lower it, the high tax rate does have one benefit at least.
For the sake of balance...
Chris
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The point is still being missed that the government makes (Takes?) far more from every litre than the oil company makes. If the oil company reduced the price they charge to 5p per litre, the government would still be adding the same tax as they do at the current price.
The consumers fight should be aimed at the government, not the producers.
Granted I work in the oil & gas industry so I might have a slighly slanted view but I also have some inside track knowledge on what the costs are to find, develop and produce oil. Not many industries would "chance" the amount oil companies do to risk drilling an exploration well or building a oil production platform or ship.
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Still seen nothing on any of thee threads to explain the current diferential. Take HJ's point about heating oil, but why is that a factor in October November before the northern hemisphere winter. Even when there was a tax difference of 1p plus in diesel the diferential was only 3p in Jan/feb
So any ideas, the oil companies are not rushing out public explanations but then the truckers are not up in arms either.
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Tony,
Is it still the case that the oil companies are not able to allocate their costs fairly and accurately across the various product streams. I recall they used to split the costs based on what they believed the market price should be, not what it actually was.
ThUs it was dead easy to prove that one product was making a loss, yet the bottom line was very black. Or am I just mud stirring?
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Anybody living within driving distance of the south coast who resents the price of diesel might note that you can now buy an afternoon return ticket from Dover to Calais on P&o/Stena for £12.50. If you have a car with a large tank, diesel in Calais is about 50p a litre and you can easily recoup the fare - let alone the saving on all the other over-taxed necessities such as beer, wine, etc
nb ...If you take an empty 20-litre vegetable oil container in the back of your car, the saving on diesel can be even greater. (the ferry company can refuse to carry fuel in containers, but they are unlikely to look ...)
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