Road fuel not expensive

anewman

The scale doesn't start at zero so is a bit misleading but the wars are pretty obvious on there and so is the recent escalation.

thescouselander

jamie304 wrote: »

I am afraid these prices are here to stay. On the futures market oil is $140 a barrel at 8 and 16 years in the future. So that means the market does not expect the price to ever come down.

Sure, some of the current price is speculation etc, but only about $20 of it. There will be small ups and downs but we will never see oil at $100 again, and that is down to long term supply issues - it really is starting to run out.

What the market expects is not really relevant in the long term. If there is an oversupply of oil the price will come down and those holding oil futures they bought at an inflated price will be left out of pocket.

Of course I could be wrong, nobody can predict the future, only time will tell.

C_Ronaldo

The oil companies ought to find sme more oil wells where there isnt any wars so then not to totally depend on oil from areas like middle east

Pew_Pew_Pew_Lasers!

C_Ronaldo wrote: »

The oil companies ought to find sme more oil wells where there isnt any wars so then not to totally depend on oil from areas like middle east

Wow, I think you should be running an oil company tbh.:rolleyes:

AdrianHi

C_Ronaldo wrote: »

The oil companies ought to find sme more oil wells where there isnt any wars so then not to totally depend on oil from areas like middle east

What like these ones around Brazil as reported a few months ago, but sometime away from being productive
I wonder if wars follow oil though....

meester

MarkyMarkD wrote: »

The duty hasn't changed, and the VAT is a constant proportion of the basic price.

So the increase in price is due to the underlying oil price, not the duty or the VAT.

The VAT is a 17.5% gearing on the cost of oil. So if the oil prices rises 10p, the government stick 1.75p on top. (actually this money gets sent off to the EU to waste instead, but let's not split hairs).

Petrol duty is currently 50.35p

With an average price currently 114p, that means that VAT is 16.98p

So the total tax is 67.33p

The price without tax is therefore 46.7p/litre.

meester

jamie304 wrote: »

I am afraid these prices are here to stay. On the futures market oil is $140 a barrel at 8 and 16 years in the future. So that means the market does not expect the price to ever come down.

Sure, some of the current price is speculation etc, but only about $20 of it. There will be small ups and downs but we will never see oil at $100 again, and that is down to long term supply issues - it really is starting to run out.

Nonsense. The futures price expresses, more than anything else, the no-arbitrage principle, and the future price should simply be equal to the current price multiplied by the risk-free rate of return. Futures are written as a hedge, not as a price prediction, even though they are often used to make a profit out of your opinion on price direction.

Don't forget that you can still buy bonds that were issued in the 80s paying double digit interest (of course the price of those bonds now is above face, so the yield is the same as you'd expect).

tomstickland

molerat wrote: »

One of my local garages is charging 99.9p for LRP and making more profit per litre than he gets from anything else. Why is it so cheap ? He says it is because no-one wants it so he can get it very cheaply from the suppliers. I think that proves the oil companies are profiteering as they are piling increases onto the products that they know we cannot reduce our usage of.

What a brilliant idea! It used to be more expensive than premium unleaded.

meester

molerat wrote: »

One of my local garages is charging 99.9p for LRP and making more profit per litre than he gets from anything else. Why is it so cheap ? He says it is because no-one wants it so he can get it very cheaply from the suppliers. I think that proves the oil companies are profiteering as they are piling increases onto the products that they know we cannot reduce our usage of.

The tax on that is 65.23p/litre. Meaning they are charging 34.7p/litre.

Given that crude oil cost $135 per barrel of 159 litres from Saudi Arabia or wherever else, that works out around 43p/litre on a very crude (sorry) calculation BEFORE processing, delivery, overheads, etc. So that LRP, which is I believe is normal unleaded with additives in it, is being sold below the cost of production.

It's simply not the case that oil companies are profiteering. Supermarkets lose money on fuel as a loss leader.