Sunday, August 12, 2012

Here's a tiny example of how oil prices can be hiked up in a single hour. This week a couple of Tweets from an anonymous Russian source wrongly alleged that President Assad of Syria had been killed or injured. Word spread like wildfire across the oil traders desks and in the sixty minutes that it took for the information to be discredited (I wonder why it took so long), the price of crude jumped $1.17 cents a barrel. That might not sound a lot in isolation, but if on that particular day you were looking to shift a couple of hundred thousand barrels and you did a deal in that sixty-minute window, you'd be rather pleased with yourself. Absolutely delighted if you had a tanker or two holding millions of barrels of the stuff. And if you were an oil company who rashly happened to buy those millions of barrels, you'd have to pass that deliberately inflated price all the way down the supply chain to the poor hapless consumer at the pumps. That's the way it works folks. When you stare at the digits on that petrol or diesel pump, watching them inflate like the currency of a banana republic, around 30% of the price of every barrel of oil is due solely to the continuous market manipulation of fund managers and oil traders. On average you and I pay $30 more per barrel than we should. Oh, and an even more sizeable, but equally questionable, chunk of your cash goes in government taxes.


 

And to see who gets the lion's share let's look at the numbers. Today I paid £1.37 for a litre of unleaded. Over 60% of that goes to the government, up to 5% to the petrol station owner and the remaining 30% or so to the oil company. The actual cost of the petrol in a £60 fill up before tax is just £24. Of that £1.37 I spent on my litre of unleaded, the wholesale price of the petrol was 51p, the garage profit margin 4.87p, the fuel duty 57.95p and VAT at 22.97p So the government takes the most, followed by oil speculators, then the oil company and then the petrol retailer. To be fair to the oil majors they have to invest billions to get their oil out of ever more difficult places and then refine and distribute it. The oil company's actual operating profit margin can be between 7 to 20%. In 2009 the average oil major margin was 8%. And petrol retailers tell me that they're lucky to retain a margin of 2% on every litre they sell.


 

So the absolute villains here are the government and oil speculators. Reduce or control their financial take on every litre and the price of the world's petrol and diesel would drop like a falling Steinway. Its as simple as that. The complicated bit is how to make it happen. FairFuel has always believed that relentless pressure and complete transparency of markets and taxation regimes is the only way ahead. And when you consider the massive benefits that lower fuel prices would have on the global economy, you'd think there would be armies of Harvard and Oxford PHDs working on how to make The Big Change happen right now. I know I sound like a misty-eyed idealist, but something's got to give. The current way that oil and fuel is priced and taxed is nothing sort of iniquitous and absurd. But why are you and I, gentle reader, the only one's who seem to care at all?

 

Quentin Willson  Please sign up and support FairFuelUK. We need every signature to put pressure on all involved with pricing our petrol and diesel




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[ posted by GEOFF PADDOCK, 12.08.12 11:15 ]

What you have to realise is that NOBODY but the motorist has any interest in prices coming down. Oil Giants are looking for even more massive profits, Share dealers are just lining their pockets. The Government wants more taxes, then there are the Green Lobby, Global warming groups etc. Everyone has a vested interest in raking in the motorists money - or cutting usage of oil and the only way they can do this is by keeping prices artificially high. Not all countries stand for this but here on our little island we dutifully (no pun intended) pay up and whinge which everyone who matters ignores. I see no future for motorists at this rate and I have no idea what we can successfully do about it.

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[ posted by Azzy Mozzer, 12.08.12 18:05 ]

Oh god the troll strikes again, taking his crusade to the FFUK website itself after years of antagonising people on Facebook.

Geoff is right about the vested interests thing, some of the MP's have got their fingers in the green lobby, the global warming lobby and so on. I've always had an opinion that Osborne's predecessor Alistair Darling was on some anti-motoring quango with the amount of times he kept hiking up fuel duty during his short tenure at Number 11. He should still get a big finger of blame for helping to ramp up the cost of fuel with his relentless hammering of the motorist. 6p rise in one year, reintroduction of the fuel price escalator, says it all.

Had it not been for the lobbying from FFUK, the level of fuel duty would have been around 70p in every litre. I'm sure had Labour won the election in 2010, Darling would have still been in office and pushed fuel duty even higher, hell he probably would have pushed it towards £1 in every litre given the chance. The 8p that got canned came from his escalator mechanism, and this impending 3p rise in January was one that Osborne has kicked down the road every time he's come up to it, instead of cancelling it completely.

The price of oil is bad enough and the speculators' activity is completely unethical to line their fat pockets, to the point where they are getting people to manipulate news to justify sticking the price up as per the false story about Assad. I recall an incident where a trader bought billions of litres of oil to ramp up the price, which allowed him and his cronies to net a juicy profit. There was another one about Dinner Jacket getting killed in Iran, which caused the speculators to go into a price busting frenzy.

However as Quentin has rightly said, the government are the main problem. They can't control the price of oil, but whereas they could put pressure on the speculators' dirty work, they can control the level of tax. Put it this way, if fuel duty was slashed by 50%, we'd be paying around 95p to £1 per litre, based on 20% VAT. The government can reduce the rate of VAT, in fact it doesn't have to be the same rate of VAT for other goods. If fuel was subject to the 5% rate as per other forms of energy, the cost at the pump would be even less. However the whole procedure of DOUBLE taxation is unjust as well.

No wonder the Bank of England has said that growth has stalled and that the UK economy looks like going nowhere for the next five years. It doesn't take an economist or a CEBR report to tell you that people have no disposable income to spend in the high street and boost the economy, because people have had to keep that money aside to fill their cars up.......... tourism has been hit hard, because people can't afford to go in their cars to drive to the tourist areas. Its even got to the stage where people have even had to SKIMP ON FOOD just to ensure they just about have enough money to put fuel in the car. And you wonder why so many food banks are popping up, this is not a third world country for heaven's sake!!!!!!!!

This is how bad the situation has become. Just three years ago this week was the last time fuel was under £1 per litre at the pumps, when Asda told everyone that they were charging 99.9p, after a few months above a quid....... THREE YEARS, since then hardly anyone's wages has gone up, but inflation has because of the cost of fuel. Food is so much dearer, delivery costs are huge in comparison to 2009, hell even the Royal Mail felt justified to stick the cost of a first class stamp up which no doubt was down to lower profit margins due to the cost of diesel to drive their red vans in!

The next general election will certainly be played against the backdrop of extortionate fuel prices and it only needs a political party to get on their soapbox and tell the people they will slash fuel duty and completely reassess the system of fuel taxation to get them onside with the electorate. Labour won't be that party, because Johnny Motorist knows very well what they did for them. It's certainly a case in the US at the moment where fuel prices are a common concern, and their prices are FAR LESS than what we have to pay for.

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[ posted by admin, 12.08.12 18:50 ]

Thanks Azzy, I have removed his comment. It slipped through again. Best Regards Howard

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[ posted by Azzy Mozzer, 13.08.12 15:30 ]

And again the oil speculators continue to push oil higher. It'll probably finish off at $115 for Brent at the end of play today.

Is there any end to this madness?

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[ posted by Azzy Mozzer, 17.08.12 07:50 ]

Me again.........

Whats the FFUK reaction to the latest Daily Express article titled "MISERY AT PUMPS AS PETROL PRICES SOAR TOWARDS NEW HIGH".......... I think its scaremongering again because a certain Brian Madderson spoke out, he always does as soon as speculators go on the greed train, and predict DOOM.

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[ posted by Jim King, 21.08.12 22:30 ]

know i say a lot but here you go. Today fuel cost £1.36 per litre.

you may think that is more expensive for diesel than your area, but here me out. Of that:

55p per litre went to the fuel co. and to the retailer. this is the bit the speculators can get at.
11p went direct to the government on VAT on sad litre of fuel
58p went direct to the government as "Fuel Duty"
12p went direct to the government as VAT on the fuel duty.

so there you go of each litre at £1.36, 81p of it goes straight to the government.

now i dont like the speculators any more than you do, but, come on. We really know who is to blame here. And the colour of a party tie will not help, we know that.

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[ posted by Nigel, 29.08.12 12:28 ]

"But why are you and I, gentle reader, the only one's who seem to care at all?"

Because we're the only ones not making millions of pounds a week from the arrangement?

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[ posted by Clive, 07.09.12 10:31 ]

The government's office of fair trading enquiry will change nothing, I guarantee it!

Why?

Because every time the price is hiked artificially by hedge fund managers etc the grabbing government get a windfall in extra VAT.
It is the same with investigations into domestic fuel, gas, electric etc nothing will ever change until VAT is removed from these essentials which are as necessary to us as food and clothing!

If the people who, "control/rule us" had to pay for every mile they drive and every heating and lighting bill they incur, on their second dwelling in Westminster, they might feel the same pain as the rest of us. Until then NO CHANCE!

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[ posted by Del, 10.09.12 11:18 ]

There seems to be a Government attitude against anything that might cause the economy to grow,get people able to afford to comfortably go to work and about their daily activities. The price of fuel in proportion to the average persons cost of living is counter-productive to improving the voters life.
If, as a Government, you were ' in this together', walking with us through this phase of economic austerity, surely you would make life easier.
What purpose is being served by ' charging' Mr and Ms Folk 81p per litre, to travel to work,in order to work in a job, that leaves them Just Over Broke? Is there an M.O. function to keep us all struggling?
I'm just confused with the seemingly,ludicrous situation whereby we pay extortionate amounts in fuel and fare prices.

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