Posted on 03/16/2020 12:54:20 AM PDT by nickcarraway
Pricewatch: There are several reasons for the apparent rip-off but the main one is tax about 8 hours ago
A man called John contacted us to see if we could “challenge the consumer rip-off at the pumps”.
Clearly annoyed, he pointed out that crude oil wholesale prices had declined dramatically in recent days as a result of the spread of coronavirus and a dispute between Saudi Arabia and Russia. The price of a barrel of oil had fallen over 30 per cent from $68 to $45 while the euro had strengthened versus the US dollar. “Yet the price of diesel per litre at pumps fell maybe 3c or 4c. The only logical conclusion is that the consumer is being ripped off.”
In fact, by the time we got to read his email, the price of a barrel of Brent Crude was closer to $34 a barrel and oil prices had fallen on a scale not seen in a generation. But despite precipitous declines on international markets, price falls on our forecourts seemed negligible.
This is not the first time wholesale prices and the price we pay at our local garage have been out of whack, and it is hardly surprising that when it happens many people blame petrol companies and accuse them of making easy money.
That is not the actually the case – or at least the only reliable evidence we have would suggest it is not the case. The only major study into fuel prices in Ireland was carried out by what was then known as the National Consumer Agency almost a decade ago.
It found that Irish petrol companies did not artificially inflate prices. Figures from other sources, including the AA, have also routinely shown that forecourt fuel prices in Ireland do track international pricing pretty faithfully.
Tax factor So why does it seem like we are being ripped off? There are several reasons for that but the main one is tax. Most of what we pay at the pump is made up of various taxes placed on petrol and diesel. In fact, if a litre of fuel costs €1.40, about 90 cent of it goes straight to the taxman. That means about 50 cent has to be divvied up between the people who get the oil out of the ground, those who refine it and those who ship it to Ireland as well as those who actually sell it to drivers here. According to multiple sources, retailers here make about 5 cent on each litre of fuel sold.
Another factor is timing. If a garage buys its stock of petrol and diesel and pays a certain price, it has no real option but to sell it to drivers at a certain price, irrespective of what happens on global markets.
Having said that, with the price of crude oil now at one of the lowest levels in a generation, the prices on forecourts will have to fall and fall quickly. In the past, when crude prices have been hovering at $30-$40 dollars a barrel, the price of a litre of fuel to consumers should be about €1.20 or so. And that is the price you should be expecting to see in the days and weeks ahead.
Easily explained in the US, but Ireland?
Taxes.
It’s been like that for as long as I can remember. If the price of oil goes up pump prices go up instantly but if they go down it lags by ages.
Funny how that works.
“The biggest single component of retail gasoline prices is the cost of the raw material used to produce the gasoline – crude oil. Recently, that price has ranged between $50 and $70 per barrel, depending on the type of crude oil purchased. With crude oil at these prices, a standard 42 gallon barrel translates to $1.19 to $1.67 per gallon at the pump. Excise taxes add another 49 cents a gallon on average nationwide.
There are additional costs to refine, transport, and sell gasoline at retail outlets. As of January 2019, crude oil costs accounted for 53 percent of what people are paying at the pump per the U.S. Energy Information Administration. Excise taxes averaged another 17 percent. That leaves 30 percent for the refiners, distributors, and retailers.”
From here:
https://gaspricesexplained.com/#/?section=gasoline-taxes-by-state
Link includes a US map of gas taxes by state (IOW, your results may vary)
1.79 reg gas and 2.23 gallon diesel
1.67 here in michigan...
and massive refinery fire at Carson CA , Marathon Oil-one of the countries largest
I filled up on Saturday. $1.99 a gallon. Down ten cents from two weeks ago
True that! They always blame it on the spread but they sure do go up faster than the spread meets equilibrium when they are higher. I predict if this keeps up we will be investigating gouging, because there sure isn’t going to be much travel for awhile and the law of supply and demand should be working here..
1.64 here last night.
You don’t get 42 gallons of gasoline from a 42 gallon barrel of crude oil. That number is around 19 to 20 gallons of gasoline per barrel and around 11 gallons of diesel.
And refining capitity.
I got gas for $1.55 Saturday.
Capacity...
We need more refineries.
ASAP.
Gotta love MA. Gas is still is about $2.40 most places around me, although I go to a place that is currently $2.15. I consider that a bargain but I guess many other states are seeing significantly better prices.
Still don’t understand how, if the price of oil goes up, the price at the pump increases immediately but if the price of oil drops, it either takes a long time to show a little drop or it doesn’t go down at all.
Other than us being screwed which I do understand and we can’t do a thing about it.
Saw gas for 1.65 per gallon yesterday. I’d say prices have gone way down.
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