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.
Easy for you to say......
3.05
ARCO (165 reviews)
73980 CA-111 & Portola Ave
Palm Desert
8h ago
Yup. Was going to say exactly the same thing.
Retailers have to work through their inventory that they paid $X per gallon. Once the inventory that is gone they can charge $Y/gallon. With the assumption price Y < X .
It’s kinda goofy where I live. There is a Valero station I always pass just before I get on the freeway. It is always at least 20 cents more than the stations I pass a further distance from the freeway. However, today those stations were stuck on the same price they’ve been at for a week, $1.99, while that station was at $1.82.
I’ve seen signs of that sort of stuff all over.
In a way, I’m feeling a bit like I’m living in a “pseudo post apocalyptic world where everybody and everything is fine, but it’s all still shut down.
To quote a dead leader, “we have nothing to fear but fear itself.”
$$$$$$$$$$$$$$$
Yeah, it’s *got to work it’s way through the system.*
Because they don't sell Crude Oil at the pump? The price you're looking at on the pump for gasoline, is the cost of Industry, Transportation, Labor and Taxes. We have been paying close to cost for a few years now. Anything under $2/gallon is moving the product along at a loss.
What a coincidence........
RE-FI YOUR MORTGAGES NOW TOO!!
where is “here”
Make sure you give a location if you are going to post a “I paid XXX here last night” post.
Last I checked wholesale for a gallon of regular was $.97.
Prices here (Texas) have dropped significantly - 15%, or more. It must be kept in mind that the cost of the raw material, oil, is only a part of the final price. The costs of, transporting it to the refinery, then refining it, and then getting it to the consumer, then the huge TAXES, all are fixed. The raw oil cost is the only thing that has dropped.
Bingo!
It is just like Interest rates are now 0 and look at your Credit Card interest rates.
I have great credit and my interest rate is 17.40% (Prime + 12.65%). WTF?
I am told that is really good, and I am not buying it. That was crap credit in the 1990s with higher interest rates by the Fed.
Good thing is I pay off my credit card every month, and I get cash back for it. So everything goes on it and everything gets paid off, and 0 interest is paid. I only use it for the cash back purchases.
It may also be the depreciation of the dollar.
The Fed is printing (well really typing on a key board) more USD. So we are seeing a depreciation of the dollar. Check out this web site.
https://www.in2013dollars.com/us/inflation/1970?amount=20
Still 3 bucks in the People’s Soviet of Washintgon
Uh. This isn’t hard. Oil and gas are bought on the futures market. Yeah-it does go up immediately (which is how they get you)-but the price of the stuff in the ground at the gas station isn’t what is reflected on the TV. That’s next month’s contracts. However-right now-has futures (RBOB) are through the floor-$.69. That’s down 23%.
Middle of the country. The USA that is. Let’s say, Missouri.
Taxes and cost to refine and ship are inflexible.
Price reductions take a few weeks to reflect at the pump. Speculation of higher price per barrel and the pump prices are jacked up the next morning.
They have dove here in Alabama. Most stations are below $2.00. Out on the National Guard base I paid $1.74 this past weekend.
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