MSE News: Petrol market 'working well', despite high prices

ChopperST

No government is going to risk taking on the oil companies ever.

I find it a bit farsical the argument regarding motorway service station "costs." Its hardly as if the tanker driver has to drive off the beaten tracks to get there.

Also the fact that diesel is more expensive than petrol yet its a less refined product and hence cheaper to make is ridiculous, it's mearly a case of supply and demand. Modern diesel engines are more efficient than their predessors and are therefore more popular with the motorist. What does the industry do? Increase the price...

Chapperss

I do find it odd that the prices in the local stations are so close to each other all the time and if one gets more expensive/cheaper the other follows very quickly. Competition or fixing I don't know but on thing I do know is I don't trust this report for toffee.

ShowMeTheDeal

This is without doubt a tax issue - when you take away the tax it is cheap. Don't see it changing as the government won't ever cut the tax - no matter who is in power. Was disappointed with this report I must say as when I heard about it this morning I was hoping for something meaningful - this however is not.

wba31

Next week they will announce that the prices cant be too high as we all keep buying it no matter what price they up it to...

steve-L

ChopperST wrote: »

No government is going to risk taking on the oil companies ever.

Really, then what do you call retrospective windfall tax?
Oil companies and governments are in a constant two way tug... oil companies pay PRT, corporation tax and every extra tax known....

HOWEVER .... you do not need to be a supermajor oil company to sell petrol!
Witness the supermarkets ..... refined petroleum product is traded, anyone (with the capital and willing to play is risk game) can buy it...

After all tax is paid, the average amount of leeway is about 12p/l for a service station (and most are actually franchises).... this is all they have to both attract custom over another service station AND make profit.

Profit wise the price at the pump and retail sales are a minor part of a supermajor's income.... don't believe me the annual reports are all available online.... the only time it is really a 'decent' profit centre is when oil price drops.... indeed many smaller oil companies (who could buy Tesco and Sainsbury's) outright and not blink choose not to have service station in the UK. Its just not profitable....
Also see the current trend for having a Tesco, M&S attached! They make more money out of these than they do out of selling petrol...

I find it a bit farsical the argument regarding motorway service station "costs." Its hardly as if the tanker driver has to drive off the beaten tracks to get there.

The tanker has nothing to do with it ... the issue is the rent they pay for that service station to the 'hospitality company' that owns the service station.

Put this in context.... a bottle of mineral water at LIDL costs a few pence.... Waitrose or M&S might sell a functionally identical bottle for £1..... WH Smith's in Hull might sell it for £1.50 but WH Smiths in Waterloo station might sell it for £2.50 and WH Smiths in duty free might sell the same product worth pence for £5.50.... as you are a captive market.

Also the fact that diesel is more expensive than petrol yet its a less refined product and hence cheaper to make is ridiculous, it's mearly a case of supply and demand. Modern diesel engines are more efficient than their predessors and are therefore more popular with the motorist. What does the industry do? Increase the price...

The increase has NOTHING to do with the industry.....
Mostly they would love a larger market for a byproduct!
The increase in diesel is over 100% tax driven, how is it over 100% .. because the service stations have even less margin on diesel than petrol and the oil companies want to get rid of it without having to ship it to other countries where it is taxed less!

cardinalbiggles

TattyBear wrote: »

OFT must think the public are complete idiots. I've no idea why this useless excuse of a dept even exists.

Staff in the petrol kiosk of my local Tesco once told me they regularly phone up the Esso 2 mins drive away to find out what it was charging so that Tesco could charge the same.

With all respect that's exactly how the markets for anything work. Tesco will charge what they can get away with and they will drop if they are being undercut. That's really simple economics and not price fixing.

Price fixing is where different companies all agree a price to charge and stick to it.

steve-L

cardinalbiggles wrote: »

With all respect that's exactly how the markets for anything work. Tesco will charge what they can get away with and they will drop if they are being undercut. That's really simple economics and not price fixing.

Price fixing is where different companies all agree a price to charge and stick to it.

Its also what the supermarkets do on 'price promises'.
I'm rather glad they do because it means I can get my diesel and shopping in the same trip without paying more for my diesel or heinz beans!
:rotfl:

minislim

i contributed to the information used in the OFT investigation.
so to read the report today to find that they see nothing wrong with it was a massive dissapointment.

they only seem to look at the pennies in their investigation. notthe fact that overall this product is bought in larger amounts than its unit price. which can the lead to massive differences in price.

and it actually makes out that before tax we as a country have one of the cheapest fuel prices in europe! hahaha! dont make me laugh! i thought it was april the 1st when i read that bit.

a massive waste of mine and the tax payers time if you ask me.

i probably wont bother putting my view accross if this is the sort of "cover up" we get!

minislim

cardinalbiggles wrote: »

With all respect that's exactly how the markets for anything work. Tesco will charge what they can get away with and they will drop if they are being undercut. That's really simple economics and not price fixing.

Price fixing is where different companies all agree a price to charge and stick to it.

This is where tesco now seem to let themselves down. they used to have a price promise hat they would be cheaper on fuel than nearby petrol stations. this doesnt seem to apply anymore.
only sainsburys and asda still seem to try to do their bit by keeping their fuel prices at least a penny cheaper than the others.

not been a great last 12 months for tesco.

their "every little helps" slogan seems to have no real meaning any longer!

unless they really start do something to "help" their business will continue to go downhill.

jobdone1

this sounds like a situation like the massive fiddle / !!!! up of the franchise of the rail. BUT THEY GOT FOUND OUT FOR THEIR FIDDLING. I wonder if this joke of OFT report will be exposed for the rubbish that's within,