CityCyclingEdinburgh Forum » Debate!
Petrol / diesel price review by OFT
(9 posts)-
Posted 12 years ago #
-
The graph at the bottom of the article should be at the top;
Since 2000, price of crude oil quadruples. Since 2000, price of oil and diesel doubles. Am I missing something? What's the enquiry for? If there was the grand conspiracy that is "the war on the motorist" then surely price of petrol and diesel would have increased AHEAD of the market value of crude oil?
I wonder what the OFT expects to find. I assume their remit does not go as far as tackling price-setting abilities of the OPEC cartel and that it doesn't have some magic ability to circumvent ever increasing demand in the face of inevitably ever-decreasing supply?
Posted 12 years ago # -
It implies that petrol prices should track the price of crude. They miss the point that crude is an investment commodity. Crude also tracks the price of petrol. The demand for petrol is relatively price inelastic so as petrol prices rise, crude looks like a more attractive investment, so its price rises. Nicely circular.
Posted 12 years ago # -
Into, could you head along to any inquiry and save them a load of time and money?
Posted 12 years ago # -
I am making the perhaps crude (baddum, tsch!) assumption that refiners of oil have to pay a price for the raw product (crude) that has some sort of relationship to the market price of the stuff?
Posted 12 years ago # -
Not necessarily, as they may have pre-bought a certain amount of output at a fixed price some time ago before it came out of the ground (I believe traders call this 'oil futures').
Posted 12 years ago # -
Some do some don't. Depends on the company where in the world they are etc etc.
Most UK refiners will pay roughly market rate but then most UK refiners aren't directly coupled with a UK oil producer.
Posted 12 years ago # -
they may have pre-bought a certain amount of output at a fixed price some time ago before it came out of the ground (I believe traders call this 'oil futures').
Indeed, however this only serves to delay the inevitable (unless you can buy a 12-year future, but who would sell you one of those as they'd be bound to lose out?!), you are still paying market value, just a market value determined at some other point in time.
Anyway point I was trying to make was that the rise in crude price is inevitable and ultimately irreversible. There will always be a link between the price of the stuff used to make petrol and diesel and the price of petrol and diesel. The price of petrol and diesel is increasing at a rate much below that of the raw feedstock. Where is the conspiracy in that?
Posted 12 years ago # -
I guess the conspiracy comes in the uniformity of prices at the pump, which suggests either stiff competition or cartels. Or it comes from the variation in price between areas where there are multiple suppliers and prices are low and areas where there is a monopoly supplier and prices are high. Or a combination of the two.
Posted 12 years ago #
Reply
You must log in to post.
posts
