Worst convenience store price mark-up

Wig

We know the pre tax price of a litre of petrol costing 92p retail is 31.1p so just deduct the cost per litre of a 40,000 litre delivery from that figure and you have your gross profit per litre. I guess it costs about 20p per litre.

Bilbodotcom

I know that most supermarkets don't make a profit at all on the fuel they sell at their PFSs. In fact when promotions are run (spend £50 in store, save 2p per litre etc) then it actually sells at a loss - compansated by the extra grocery sales.

Altarf

Wig wrote:

We know the pre tax price of a litre of petrol costing 92p retail is 31.1p so just deduct the cost per litre of a 40,000 litre delivery from that figure and you have your gross profit per litre. I guess it costs about 20p per litre.

Spot price of unleaded was 24.56p giving a gross retail margin of 3.74p acording to the Petroleum Industry Association Limited (on a pump price of 88.6p at June 2005).

http://www.ukpia.com/Portals/0/Repository/Documents/UKPIA%20Petrol%20price%20comparisons%20Aug%202005.pdf

Wig

Well done for finding that price. Call me a sceptic...I don't buy those figures. The duty rates are spot on, so the only thing I question is the supply price.

Altarf

Wig wrote:

Call me a sceptic...I don't buy those figures.

The figures are correct, but remember you are only looking at the retail profit.

The oil companies earn most of their profit at the refining / wholesale stage, not the retail stage. If you go into an oil company garage (Shell, Esso, BP, etc), even if it is run by the oil company rather than an independant dealer under a franchise arangement, they will still 'sell' the fuel from their wholesale division to the retailer division. So the retail division of the oil company is paying wholesale prices rather than refinery prices.

Wig

Ok you just hinted at something there. There maybe a middleman between refinery and petrol station, you call the wholesaler. I think it is posible to buy direct from the refinery, and I wonder if the likes of Tesco do this...do you know? I remember we had "action" petrol stations he said he was cheaper cos he cut out the middleman and had his own tankers to pick up and deliver the petrol (presumably from the refinery). Dunno what happened to them though.

Altarf

The oil companies are going to charge their retail divisions pretty much what they charge the independant retailers (ordering the same quantities, same delivery area, etc) otherwise they would be in hot water for price fixing. As this is a 'delivered' price then it is going to be a higher price than if you collected the fuel.

The big supermarkets either buy from the spot market or have a deal with one of the oil companies, so will not be paying a normal wholesale price as it will be a price to supply all their stores.

As for a refinery price, this will be what the oil companies pay when they buy each others fuel. If you look at a map of the refineries in the UK, it won't take you long to work out that if you are in certain parts of the country, no matter which garage you go into, the fuel will almost certainly come from the same refinery. Therefore the oil companies need to sell fuel to each other to supply their own garages and customers.
http://www.energyinst.org.uk/education/refineries/map.htm