Why are the petrol price cuts so small when crude oil prices have fallen so steeply?
Crude oil is only one factor influencing the retail price of petrol. In the UK, the crude oil and the cost of refining it into petrol accounts for less than 20% of the final cost of a litre at the pump. The remainder is mostly taken up by fuel duty and valued added tax (VAT). Esso claims that a retailer makes only about 5p for each litre of unleaded sold for 84p, with 61p going straight to the government in taxes. The retailer’s 5p has to cover other expenses including transportation, storage and processing as well as credit card charges, which alone work out at more than 1p a litre, according to Esso. Competition can also be fierce. Shell claims not to have made a profit selling petrol in the UK for three years. Despite this, is the motorist being hard done by? On the face of it, yes. Wholesale petrol prices have dropped to early 2000 levels but pump prices are about 4p a litre higher on average than a year ago. Accusations of profiteering are again being made. However, retail prices
