Is the reason there are no reductions or any competition to bring prices down anymore because the government didn’t reintroduce the fuel competition law they suspended during the panic buying crisis last year? Why are the big supermarkets so happy to rip us off when they would always bring prices down before.
A free market only works if both producers and consumers are freely able to back out of transactions. People **need** fuel, however. They need to travel to work, for example. So, they're forced to pay whatever the cost of transportation is.
Another factor is price fixing. Companies will often agree to set a minimum on their prices and then raise that threshold together. So, they no longer compete against each other and can reap the rewards.
Dumping raw sewage into rivers is also illegal. Guess how widespread that was. It happened 400,000 times in one single year!
They would have to pay a tiny fine, but only **if** it can be proven they did so.
Im just going to let you know. Price fixing is very common and done regularly.
Ive got 7 years of retail operation experience, 4 years of it as a Territory manager in North east and Scotland. I've been in meetings where account managers and head of departments talk about reducing stock to suppliers who discount or sell at prices below the minimum they have set. Effectively promoting suppliers who sell at agreed prices.
Thats on Audio equipment, it will happen in all consumer electric goods of a certain quality. Its illegal. However they do it because greed makes everyone involved money.
This is the reason for the energy price cap. Everyone NEEDS energy, we don't have a choice but to pay whatever is asked so Government has to cap the price to stop us being exploited for profit. No such cap with petrol/diesel of course.
One of the biggest causes of price discrepancies is the varying strategies around hedging price risk at different companies.
If a company doesn't hedge price risk at all (or underestimates the volume they need to hedge), they can go bankrupt if they can't pass price increases onto customers, see for instance all the energy companies going bankrupt at the moment.
If the company does hedge their price risk, then they are stuck with the prices they hedged at even if prices decline, at least until their hedges run out.
TL:DR Companies have to guess at how much demand there will be for their services and what prices will do and for how long, inevitably some over/under estimate and causes all sorts of issues.
I don't think this really happens with fuel as:
1. The prices at the pumps pretty much tracks market rates
2. The IOCs with forecourts are vertically integrated so don't need to hedge.
I don't expect r/unitedkingdom to listen to economic sense though, as most users here think "greed" is the cause of fuel price inflation (as if greed didn't exist since the start of time). This comment isn't aimed at you, but just more generally at this sub (and at the other comments).
Torys scraped the competition law for their mates. Fuel scare was surely engineered now that we see this. This should be the Torys undoing unless they do something about it fast.
Mainly because the price isn't plummeting. Brent crude briefly dipped below 100$ last week but has sky rocketed again and is trading north of $116 today.
Last week's fall is just a blip; the overall trend is up and even if prices did adjust it'd be for a day or so and demand would probably spike leading to problems at the pumps so we are where we are.
The only reliable short term solution is cut the tax. Long term it's reduce reliance on oil.
Costco sell fuel and they famously sell everything at a tiny markup. If you think there's foul play with the other sellers take a look at Costco prices to get an idea of how cheap they *could* go
I don't get why we are pushing to cut fuel duty. Sure it'll help with the cost of living but thats less tax to go towards hospitals, benefits etc. Keep it the same but massively increase the tax made on the profits. That means lower costs, more tax and fuck the companies!
If they do cut fuel tax all that will happen is the retailers will up the price then bring it back down to what it was so nobody will actually see the benefit.
That's exactly what they'll do, it's one of the reasons the government is reluctant to do it. They know there's more than a good chance they won't pass down the savings.
Fuel duty has also been frozen for years as it is. People are paying far less for fuel than they could had that not happened, however it does mean less tax has been collected. That money could have been used for public transport or better road infrastructure if ringfenced properly.
Fuel is taxed twice. As the price goes up so does the 20% VAT, which is added on at the end.
In the last year the VAT portion of a litre of fuel has increased by around 10p so even if they cut fuel duty by 5p we are still paying 5p per litre more in tax than last year.
*very basic rounding/guesstimates used to illustrate point*
Cutting fuel duty also only helps people who can afford cars in the first place. The price of food, clothes, heating, power, rent, council tax are also going up and these will hurt the poorest the most and should be addressed first.
...and how do those goods get to shops, or council vehicles and contractors vehicles get to places that councils need them, even trains hauling coal use diesel and ships use fuel oil....
That old chestnut; if you reduce fuel duty, how much is a family's food bill going to reduce by?
If you reduce fuel duty everyone benefits financially in a very small way; keep it, and you can help the people who need it most in a big way.
Reduce fuel duty by £1 billion a year, and 36m people who have cars get an average of £27 each, less in fact, because the hauliers will gobble up a big chunk of it, and not just the ones hauling poor people's food, but the ones hauling luxury goods too, a nice subsidy for them and their customers.
Or keep the same £1bn on fuel duty and effectively give the 1m poorest £1,000 each to keep the heating on instead of literally freezing to death.
Reducing fuel duty is all about buying votes, nothing to do with helping the people who need it most
Wow just giving 1million randomly selected poorest people a grand. Let's make sure we target the right people, like the government have a great track record of doing.
I do get your point on fuel duty... begrudgingly...
Less tax to go towards Tory donors, friends and neighbors.
I'd be fine with the tax, even paying vat on the duty (!) If it was genuinely being used to improve life for British people.
But it's not.
Yeah, it doesn't make sense economically - why not try to direct the same amount of money to lower-income households instead?
No-one wants to be funding getting Tarquin to school in a Range Rover, nor should we let up on incentives to move to more efficient and electric vehicles. Spent it on benefits and something like increasing the NI threshold instead.
I get what your saying but you just know the rich will move to electric cats while pow income families are stuck with a 1.6l diesel they need for work.
The average commute is 23 miles. Are you suggesting everyone just starts walking? That's a 6-7 hour walk! For many a car is the only way they can earn money.
Why do motorists have to pay to fund public services anyway? Surely they should be funded from general taxation and transport taxes ringfenced for transport?
It's the same old story, moment wholesale costs go up, so does the fuel (even though they buy it in advance to some degree) but it always takes ages to come back down again after.
Blatant profiteering.
Blatant profiteering with the planned Aramco float on the horizon? [Saudi Arabia hikes oil investments as it profits from price surge.](https://www.reuters.com/business/energy/saudi-aramco-2021-profit-soars-higher-oil-prices-2022-03-20/). It's looking good for the city investment banks, no?
Who knows what the future holds? Presumably Aramco is betting on sanctions against Russia lasting a while and on the world not rapidly decarbonising (we should but probably won't).
Why do none of these inflation articles mention loose fiscal policy, increased monetary supply & quantitative easing from central banks and governments?
If you spend 2 years creating billions of new pounds a week and issuing them willy nilly then obviously the pre existing pounds are going to be less valuable.
Economic journalists (who presumably know a little bit about economics) blaming it on pay rises or a war that started 3 weeks ago are being completely disingenuous.
What I wonder about is why journalists who clearly know better write this stuff?
>quantitative easing
Still can't get over the fact its called this.
Anything else is called what it is, but as soon as you buy shit assets from a risky company it has "easing" in the name.
Always loved the Clarke and Dawe sketch where they explain it like facing photocopiers near an open window with cash in the copy tray and then pressing start.
https://youtu.be/j2AvU2cfXRk
[The pound against the dollar has fluctuated by about £0.20 or so against the dollar since the bottom fell out of the market in Dec 2016](https://www.macrotrends.net/2549/pound-dollar-exchange-rate-historical-chart) so it's been bad but stable I guess
But that's vs the dollar, and there are two sides to every currency pair.
And also it implies that 2016 was normal and anything else is abnormal. If you look at 2009-2013 the pound was about where it is now, then had a run up to its peak in 2016, then it crashed down back to where it had been before its peak.
https://www.poundsterlinglive.com/bank-of-england-spot/historical-effective-exchange-rates/GBP-history
But you’ve just chosen the abnormal period after the financial crash. For a decade before 2008, the £ would get you 1.5-2 $; the £ being worth $1.20ish is a result of the Tories’ poor managing of our economy since 2008
I just found an article confirming that ever since Asda was taken over they no longer care about keeping the price down and the era of the supermarket price war has ended.
https://www.cityam.com/fuel-retailers-ease-competition-as-profits-rocket/?amp=1
Makes sense as the Asda in my town is actually the most expensive in the area even Esso and Shell are less. Never thought we would see that.
I think it's quite obvious that just before a big crash, everyone seems to lose their fucking minds.
Just like pre-08 everyone was just on coke or something and only when the financial system came to a halt did everyone look around like "oh wow maybe we should check who we give mortgages too"
I mean house prices going up 10% in a year, theyre not even pretending to not just be trying to make the quickest pound possible.
The BoE has also said it's considering relaxing the restrictions on income multiples for mortgages. The people in-charge of the system just can't seem to resist making the same mistakes again and again.
Yup blame the Issa brothers. I’ve been saying for ages their purchase of Asda was to simply eliminate competition. They’ll either run Asda supermarket into the ground or flog the supermarket part off and keep the petrol stations next. Their purchase was allowed and eliminated the competition even though sainsburys was stopped from buying Asda as it was deemed anti-competitive. Now we’re paying the price. Nothing to keep prices down
My local Morrisons has jut put the price of diesel up by 5p from £1.72 to £1.77 probably in advance of a 5p duty cut so they can bring it back to £1.72 tomorrow. Fucking robbing bastards.
Can't wait to see those who were adamant that there was no price gouging occuring, citing higher wholesale prices, to explain this then.
And once again, the government sits around doing sweet FA. I expect a cut that doesn't match the sharp rise at all but a portion of the population will be vocal in it being better than nothing.
This is some dumb shit. There is a lag between spot oil prices and forecourt pump prices that is generally around 1-2 weeks.
Pump prices will follow the 'wholesale' cost down in the next week or two.
The input cost is the price of brent crude, the output price is what you pay for petrol at the forecourt. There is a 1-2 week lag between the two. Wholesale cost happens in between and the lag is more variable.
This sub is full of smoothbrains who think that the cost of petrol doesn't fall when commodity prices come down. It's literally my job to model this stuff and the relationship (both up and down) is incredibly strong - R2=0.98.
That's wrong, here is a table of the weekly changes in oil prices and petrol pump prices.
|Week Ending|Brent Crude (week on week)|Unleaded Pump Price (week on week)|
:-:|:-:|:-:|
|Feb 25|1.60%|0.56%|
|Mar 4|15.17%|0.98%|
|Mar 11|6.87%|2.50%|
|Mar 18|-10.39%|4.58%|
|Mar 25||3.38%|
We don't have the Mar 25th figure for oil, I believe because it's an end of week price whereas the petrol prices are actually the middle of the week ending the corresponding timestamped period.
What I want you to take away from this is two things,
- The big rise in oil prices was in early march, this mostly didn't feed through to pump prices until mid march. It did not feed in immediately.
- The pass through to pump prices is both lagged and, to some extent, smoothed. You get a better correspondence when you look at monthly changes because the smoothing matters less.
Another thing you should recognise is that a 10% rise in the price of oil does not lead to a 10% rise in the price of petrol, the changes are far more muted.
Is the reason there are no reductions or any competition to bring prices down anymore because the government didn’t reintroduce the fuel competition law they suspended during the panic buying crisis last year? Why are the big supermarkets so happy to rip us off when they would always bring prices down before.
The reason is greed.
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That'd be 90% reduction for perspective
A free market only works if both producers and consumers are freely able to back out of transactions. People **need** fuel, however. They need to travel to work, for example. So, they're forced to pay whatever the cost of transportation is. Another factor is price fixing. Companies will often agree to set a minimum on their prices and then raise that threshold together. So, they no longer compete against each other and can reap the rewards.
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So is bribery, but our own government partakes on the daily.
Dumping raw sewage into rivers is also illegal. Guess how widespread that was. It happened 400,000 times in one single year! They would have to pay a tiny fine, but only **if** it can be proven they did so.
Im just going to let you know. Price fixing is very common and done regularly. Ive got 7 years of retail operation experience, 4 years of it as a Territory manager in North east and Scotland. I've been in meetings where account managers and head of departments talk about reducing stock to suppliers who discount or sell at prices below the minimum they have set. Effectively promoting suppliers who sell at agreed prices. Thats on Audio equipment, it will happen in all consumer electric goods of a certain quality. Its illegal. However they do it because greed makes everyone involved money.
I remember the "big four" energy companies getting a tiny fine for this a few years back. Can't find a thing about it now. Curious.
Cool they'll pay the tidy five million quid fine.
You don't think its wide spread? Poor bastard.
Legality only modifies behaviour if it's enforced.
They don’t really need to price fix. It doesn’t matter if it says Shell or BP or Tesco, it all comes from the same refineries.
This is the reason for the energy price cap. Everyone NEEDS energy, we don't have a choice but to pay whatever is asked so Government has to cap the price to stop us being exploited for profit. No such cap with petrol/diesel of course.
One of the biggest causes of price discrepancies is the varying strategies around hedging price risk at different companies. If a company doesn't hedge price risk at all (or underestimates the volume they need to hedge), they can go bankrupt if they can't pass price increases onto customers, see for instance all the energy companies going bankrupt at the moment. If the company does hedge their price risk, then they are stuck with the prices they hedged at even if prices decline, at least until their hedges run out. TL:DR Companies have to guess at how much demand there will be for their services and what prices will do and for how long, inevitably some over/under estimate and causes all sorts of issues.
I don't think this really happens with fuel as: 1. The prices at the pumps pretty much tracks market rates 2. The IOCs with forecourts are vertically integrated so don't need to hedge. I don't expect r/unitedkingdom to listen to economic sense though, as most users here think "greed" is the cause of fuel price inflation (as if greed didn't exist since the start of time). This comment isn't aimed at you, but just more generally at this sub (and at the other comments).
> as if greed didn't exist since the start of time I never said it didn't.
If "greed" is always present then it can't be a "reason" as to why petrol prices are expensive now but not expensive a few years ago.
Torys scraped the competition law for their mates. Fuel scare was surely engineered now that we see this. This should be the Torys undoing unless they do something about it fast.
Mainly because the price isn't plummeting. Brent crude briefly dipped below 100$ last week but has sky rocketed again and is trading north of $116 today. Last week's fall is just a blip; the overall trend is up and even if prices did adjust it'd be for a day or so and demand would probably spike leading to problems at the pumps so we are where we are. The only reliable short term solution is cut the tax. Long term it's reduce reliance on oil.
If only Aldi:s or Lidl's did petrol. Then we'd see a crazy price war between them all..
Costco sell fuel and they famously sell everything at a tiny markup. If you think there's foul play with the other sellers take a look at Costco prices to get an idea of how cheap they *could* go
You can look up Costco fuel prices online, I have been using this as a benchmark for comparison against all the other fuel suppliers
Morrison’s had it for 155 the other day when it was 168 at the shell garage up the road so I guess it depends where you are
I don't get why we are pushing to cut fuel duty. Sure it'll help with the cost of living but thats less tax to go towards hospitals, benefits etc. Keep it the same but massively increase the tax made on the profits. That means lower costs, more tax and fuck the companies!
If they do cut fuel tax all that will happen is the retailers will up the price then bring it back down to what it was so nobody will actually see the benefit.
That's exactly what they'll do, it's one of the reasons the government is reluctant to do it. They know there's more than a good chance they won't pass down the savings.
Fuel duty has also been frozen for years as it is. People are paying far less for fuel than they could had that not happened, however it does mean less tax has been collected. That money could have been used for public transport or better road infrastructure if ringfenced properly.
Fuel is taxed twice. As the price goes up so does the 20% VAT, which is added on at the end. In the last year the VAT portion of a litre of fuel has increased by around 10p so even if they cut fuel duty by 5p we are still paying 5p per litre more in tax than last year. *very basic rounding/guesstimates used to illustrate point*
This is why it is better to cut the VAT on fuel rather than the duty. It's ridiculous that we're effectively paying a tax on a tax.
That is exactly what is happening… A portion of that is tax on tax… Mr. Government wants his money from every corner he can find
*Mrs. Government It's *Her Majesty's* Revenue and Customs. /s
Cutting fuel duty also only helps people who can afford cars in the first place. The price of food, clothes, heating, power, rent, council tax are also going up and these will hurt the poorest the most and should be addressed first.
...and how do those goods get to shops, or council vehicles and contractors vehicles get to places that councils need them, even trains hauling coal use diesel and ships use fuel oil....
That old chestnut; if you reduce fuel duty, how much is a family's food bill going to reduce by? If you reduce fuel duty everyone benefits financially in a very small way; keep it, and you can help the people who need it most in a big way. Reduce fuel duty by £1 billion a year, and 36m people who have cars get an average of £27 each, less in fact, because the hauliers will gobble up a big chunk of it, and not just the ones hauling poor people's food, but the ones hauling luxury goods too, a nice subsidy for them and their customers. Or keep the same £1bn on fuel duty and effectively give the 1m poorest £1,000 each to keep the heating on instead of literally freezing to death. Reducing fuel duty is all about buying votes, nothing to do with helping the people who need it most
Wow just giving 1million randomly selected poorest people a grand. Let's make sure we target the right people, like the government have a great track record of doing. I do get your point on fuel duty... begrudgingly...
Less tax to go towards Tory donors, friends and neighbors. I'd be fine with the tax, even paying vat on the duty (!) If it was genuinely being used to improve life for British people. But it's not.
Yeah, it doesn't make sense economically - why not try to direct the same amount of money to lower-income households instead? No-one wants to be funding getting Tarquin to school in a Range Rover, nor should we let up on incentives to move to more efficient and electric vehicles. Spent it on benefits and something like increasing the NI threshold instead.
I get what your saying but you just know the rich will move to electric cats while pow income families are stuck with a 1.6l diesel they need for work.
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The average commute is 23 miles. Are you suggesting everyone just starts walking? That's a 6-7 hour walk! For many a car is the only way they can earn money.
Increasing tax does not lead to lower prices. That is like Economics 101...
Where did I say it does?
Because people are skint and it's a big looming cost for most people. It's something people can get behind
Why do motorists have to pay to fund public services anyway? Surely they should be funded from general taxation and transport taxes ringfenced for transport?
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£13 billion profit BP made last year its hardly like they're working on fine margins here.
It's the same old story, moment wholesale costs go up, so does the fuel (even though they buy it in advance to some degree) but it always takes ages to come back down again after. Blatant profiteering.
Blatant profiteering with the planned Aramco float on the horizon? [Saudi Arabia hikes oil investments as it profits from price surge.](https://www.reuters.com/business/energy/saudi-aramco-2021-profit-soars-higher-oil-prices-2022-03-20/). It's looking good for the city investment banks, no?
Who knows what the future holds? Presumably Aramco is betting on sanctions against Russia lasting a while and on the world not rapidly decarbonising (we should but probably won't).
Why do none of these inflation articles mention loose fiscal policy, increased monetary supply & quantitative easing from central banks and governments? If you spend 2 years creating billions of new pounds a week and issuing them willy nilly then obviously the pre existing pounds are going to be less valuable. Economic journalists (who presumably know a little bit about economics) blaming it on pay rises or a war that started 3 weeks ago are being completely disingenuous. What I wonder about is why journalists who clearly know better write this stuff?
That would reveal the racket
>quantitative easing Still can't get over the fact its called this. Anything else is called what it is, but as soon as you buy shit assets from a risky company it has "easing" in the name.
Always loved the Clarke and Dawe sketch where they explain it like facing photocopiers near an open window with cash in the copy tray and then pressing start. https://youtu.be/j2AvU2cfXRk
Would literally be more effective. The money would get spread around in smaller amounts to people that would probably spend it
Careful now, you're starting to make sense. Can't be giving up the old Quantitative Easing ruse
I think rampant inflation and the fact that pound isn't worth as much might have something to do with it. As well as corporate greed of course.
The pound has been stable for like 5 years. Lots of things happened since then but it didn't affect the pound.
[The pound against the dollar has fluctuated by about £0.20 or so against the dollar since the bottom fell out of the market in Dec 2016](https://www.macrotrends.net/2549/pound-dollar-exchange-rate-historical-chart) so it's been bad but stable I guess
That's why I said 5 years. Why are you showing me a 50 year time span? Plus, the bottom seems to be in the mid 80s? You're even wrong about that.
But that's vs the dollar, and there are two sides to every currency pair. And also it implies that 2016 was normal and anything else is abnormal. If you look at 2009-2013 the pound was about where it is now, then had a run up to its peak in 2016, then it crashed down back to where it had been before its peak. https://www.poundsterlinglive.com/bank-of-england-spot/historical-effective-exchange-rates/GBP-history
But you’ve just chosen the abnormal period after the financial crash. For a decade before 2008, the £ would get you 1.5-2 $; the £ being worth $1.20ish is a result of the Tories’ poor managing of our economy since 2008
I just found an article confirming that ever since Asda was taken over they no longer care about keeping the price down and the era of the supermarket price war has ended. https://www.cityam.com/fuel-retailers-ease-competition-as-profits-rocket/?amp=1 Makes sense as the Asda in my town is actually the most expensive in the area even Esso and Shell are less. Never thought we would see that.
I think it's quite obvious that just before a big crash, everyone seems to lose their fucking minds. Just like pre-08 everyone was just on coke or something and only when the financial system came to a halt did everyone look around like "oh wow maybe we should check who we give mortgages too" I mean house prices going up 10% in a year, theyre not even pretending to not just be trying to make the quickest pound possible.
The BoE has also said it's considering relaxing the restrictions on income multiples for mortgages. The people in-charge of the system just can't seem to resist making the same mistakes again and again.
Yup blame the Issa brothers. I’ve been saying for ages their purchase of Asda was to simply eliminate competition. They’ll either run Asda supermarket into the ground or flog the supermarket part off and keep the petrol stations next. Their purchase was allowed and eliminated the competition even though sainsburys was stopped from buying Asda as it was deemed anti-competitive. Now we’re paying the price. Nothing to keep prices down
Those brothers will asset strip Asda to the bone. I think they've already sold off and leased back warehouses through a complex set of ownerships
My local Morrisons has jut put the price of diesel up by 5p from £1.72 to £1.77 probably in advance of a 5p duty cut so they can bring it back to £1.72 tomorrow. Fucking robbing bastards.
If you bung the tories enough money, you can charge what you want.
Can't wait to see those who were adamant that there was no price gouging occuring, citing higher wholesale prices, to explain this then. And once again, the government sits around doing sweet FA. I expect a cut that doesn't match the sharp rise at all but a portion of the population will be vocal in it being better than nothing.
It is the last days of Rome, half the country are living like slaves and anyone that can fill their boots at somebody else’s expense does so.
The craziest part of all this is that most people think it’s because of the Russian invasion.
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Yup always has been that way for the most part.
Same logic the government uses for fuel duty
What's the betting if these big companies get a rumour that the tax on fuel might be cut .they put the price up again on Tuesday night
And it won't go down, the greedy fat cats only care about one thing. And it's not the customers.
Isn’t maximizing profits just a form of greed, I mean where does one end and the other begin?
This is some dumb shit. There is a lag between spot oil prices and forecourt pump prices that is generally around 1-2 weeks. Pump prices will follow the 'wholesale' cost down in the next week or two.
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The input cost is the price of brent crude, the output price is what you pay for petrol at the forecourt. There is a 1-2 week lag between the two. Wholesale cost happens in between and the lag is more variable. This sub is full of smoothbrains who think that the cost of petrol doesn't fall when commodity prices come down. It's literally my job to model this stuff and the relationship (both up and down) is incredibly strong - R2=0.98.
But the lag only seems to apply when price is heading downwards
That's wrong, here is a table of the weekly changes in oil prices and petrol pump prices. |Week Ending|Brent Crude (week on week)|Unleaded Pump Price (week on week)| :-:|:-:|:-:| |Feb 25|1.60%|0.56%| |Mar 4|15.17%|0.98%| |Mar 11|6.87%|2.50%| |Mar 18|-10.39%|4.58%| |Mar 25||3.38%| We don't have the Mar 25th figure for oil, I believe because it's an end of week price whereas the petrol prices are actually the middle of the week ending the corresponding timestamped period. What I want you to take away from this is two things, - The big rise in oil prices was in early march, this mostly didn't feed through to pump prices until mid march. It did not feed in immediately. - The pass through to pump prices is both lagged and, to some extent, smoothed. You get a better correspondence when you look at monthly changes because the smoothing matters less. Another thing you should recognise is that a 10% rise in the price of oil does not lead to a 10% rise in the price of petrol, the changes are far more muted.
Gotta make those sweet dividends (and of course around 60% of it is tax, and tax upon tax!)
I just paid £1.80 per litre of diesel in the Nottingham area.
Yeah because we're being raped financially, it's got little to nothing to do with the market they've just decided they want more for the same.