Fuel prices

[Peter Laborne]

Can anyone explain to me how the prices of fuel are set? Why is it that I can go to one garage and pay 72.9p per litre yet travel to another garage (of the same chain) and end up paying 78.9p pet litre?

I was led to believe that it goes back to the old North Sea days. The closer you were to the North East (or North East Anglia) the cheaper it was. Then the further inland you got it went up due to increased transportation costs. The only exception was the center of London as there were so many garages there was huge competition and as such, prices were lower.

Anyone got the definative answer?

[Anonymous]

When I asked the same thing of Shell Customer Services some time ago;

As you mentioned prices do vary from service station to service station and area to area, this differential is a result of competion for the product in different areas and certainly not as a result of profiteering.

[markiii]

i.e they'll charge what they can get away with.

sounds like profitteering to me.

[Anonymous]

So where there is competition the price is low and where this is no competition the price is high.
Sounds like profiteeering to me.
I'm sure I read somewhere that Shell, BP etc. are quite profitable  s:wink: :wink: s:wink:

[Peter Laborne]

So where there is competition the price is low

Within a three mile strech of the A428 near me there are three petrol stations - BP, Morrisons and Shell - yet the price is 78.9p per litre or more (Optimax is 85.9p per litre). So lots of competition yet the prices are nearly the highest in the country.

And there are many petrol stations within a 15 mile radius and all the prices are around the same.

So that still doesn't explain why it can be so low in other areas (ie 72.9p) even when there is less competition.

[Anonymous]

Do you really think their bothered, they know you need their product.
I guess their attitude is pay up or shut up, unfortunately.
I've give up looking at prices now, I tend to go the places Taxi drivers use they always seem to know the cheapest stations.

[Anonymous]

What pisses me off a lot is that every friday or holiday, the prices increase and then usually decrease again on the Tuesday. And its not just one or two places, but everywhere at the same time.

Last week the super cost €1.07, Friday it went upto €1.12 per ltr. V-Max (100 octaine)  is €1.28 per ltr.

What is the UK cost at the moment?

[Peter Laborne]

V-Max (100 octaine)  is €1.28 per ltr.

What is the UK cost at the moment?

The closest fuel to that is Optimax. My local Shell charges 85.9p per litre (€1.26 per litre).

Garages here don't really put up and down around holidays. At the moment most of them have put them up over the past could of days in anticipation that they will go up in the budget on Wednesday. If there is a price freeze on petrol duty then they will go down again...in a few months.

But that still doesn't explain why they can be so low in one place and so high in another. If my one of my local, major, garages (eg BP, Shell, Morrisons, Tesco) dropped their price of unleaded from 78.9p to what they pay up north for the same petrol (at 72.9p) then I am sure hundreds more drivers every day would get their petrol from the cheaper garage.

[Anonymous]

I would think one word - not sure of spelling   s:oops: :oops: s:oops:  


Profitering

[Tem]

Can anyone explain to me how the prices of fuel are set?

Just like any other price these days, trying to maximise the profit. Trying to find the balance between high prices and not losing customers.

[Anonymous]

Operating costs?

Do the stations pay all their employees the same across the country?  And do the utilities costs etc. needed to keep the station open cost the same? etc. etc. etc.

[SimonC_Here]

And rent on the forecourt space.

Oh, BTW, Optimax down here is 80.1 /ltr

S

[Anonymous]

I think all suggestions so far have an element of truth - they charge what they can get away with.  But I don't understand why petrol in Ashford and Sittingbourne is 76-78 p/L but much cheaper in Canterbury - 72.9 for Shell unleaded.  Strange.  There is no way more competition in Canterbury than other local towns.

[Anonymous]

Having worked in the petrol industry for the last nine years I can confirm that as an industry the guy selling you the fuel at the pump is not profittering.

Every BP/Shell/Esso service station is not owned by these companies, it is independent people who build the petrol stations and then seek supply from one of the oil companies, once a supplier is chosen the independent even pays to have the image put up so that you know what brand of fuel you are buying.  So basically each independent operator will be on a different deal with the oil company therefore depending on your deal depends at what price you sell at.

Its the oil companies that are making all the money not the poor guy trying to pump it into your car.

[Anonymous]

Its the oil companies that are making all the money not the poor guy trying to pump it into your car.

Hence the huuuuuge amount of profit made by Shell this year.

[Anonymous]

Its the oil companies that are making all the money not the poor guy trying to pump it into your car.

Actually the guy making all the money is the Chancellor of the Exchequor, but let's not get into political argument (for one thing, we should be in Chit-Chat for that... s;) s;)  )

[heathstimpson]

Fuel is mega expensive in Milton Keynes; unleaded at around 79.9p/l. I therefore fill up at Dunstable or Watford which is always at least 6p/l cheaper and yet its not that far away really  s:!: :!: s:!:

[Humble Jim]

Fuel is mostly duty to Gordon Brown. The rest is simply economics.

Supermarkets will sell you petrol almost as a loss leader and do all sorts of offers that will involve you spending in their stores. Other stations nearby will therefore of necessity closely match local supermarket baseline fuel rates.

At the other end, on motorways you're effectively a captive audience, with few real alternatives on long journeys, so a pseudo monopoly happens and you're charged as much as possible at motorway service stations even though they must turn over mighty volumes of fuel. Out in the country you're also often charged a lot, partly 'cos there's no nearby alternatives, partly because they have to make more from selling less to pay themselves. Also country stations get less discount from the oil companies simply because they sell less (and of course the stuff has to be delivered to them over longer distances).

Rent and other overheads distorts all the above. Geographically speaking in the south rents are generally higher so you might expect higher costs but I've no idea how contributory this factor might be to areas like Milton Keynes. Yes, Milton Keynes counts as "south" to me!

Oil companies take a cut but not the biggest (Mr Brown does that by a huge margin). It's often overlooked that oil companies take on the most risks too.

[Anonymous]

Oil companies take a cut but not the biggest (Mr Brown does that by a huge margin). It's often overlooked that oil companies take on the most risks too.

I can find some figures from Esso, albeit based on Oct 2000 prices, so somewhat outdated, but the basic proportions haven't changed that much since then;

Of a 79.5p/litre sale, the money goes as follows;

 - Product 16.1p (cost of crude and refining)
 - Duty 48.8p
 - VAT 11.8p
 - Margin 2.7p

That margin (3.4%) has to cover the cost of distribution from refinery to forecourt, service station overheads (rent, staff, insurance, maintenance, etc), card merchant fees (about 1%), and if there's anything left, some profit for the retailer.

  s:shock: :shock: s:shock: