Petrol vs Oil

Petrol Prices vs Oil Prices

The public is being hit hard by fuel prices and often lash out at the petrol station forecourts and accuse them of profiteering by charging excessive amounts of money for the their petrol. However is this really fair on the petrol stations?

The petrol forecourts have clearly being working hard to keep track of the massive swings in oil prices. The supermarkets are leading the way, but we at whatgas.com can conclude that most, if not all, of the oil price rises, AND oil price drops are being passed onto the consumer. It isn't happening quite as fast as the public would like, but as Oil prices drop, petrol is being pulled down with it.

There are many things wrong with our petrol industry, but it all stems from the massive amounts of taxation that are levied on our fuel - the poor forecourts take only 2p per litre sold, leaving little room for error when it comes to pricing, whilst the government takes over 52p/litre (and rising)!

The graph below shows how the average Oil Price has varied over the last few years, and this oil price is compared to the average price of unleaded 95 in the UK. It can be seen that there is a good correlation  between the oil and unleaded petrol price. If the price of oil starts to rise, then so does petrol. If the oil prices fall then this drop in price gets passed on to the vehicle owners, infact there is even evidence that suggests that forecourts manage to protect the motorist from the full effects of oil prices when they are rising rapidly.

Oil vs Petrol Prices without Fuel Tax

If you look at the price of oil and the price of petrol with the fuel duty and VAT removed then you can see that there is an even greater correlation.

And here is some more detail of fuel prices vs oil back in 2007-2008

Back in Jun 2008 there was a massive peak in oil prices to over 120 dollars a barrell, the price of petrol rapidly went up with the oil price, but didn't spike quite as much. Likewise as oil prices dropped so did unleaded and diesel prices, however they did lag the price of oil slightly.