Price of petrol megathread

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With higher fuel taxes the portion of pump prices dictated by the crude oil price has dropped further over the last few years.

So a drop from $125 to $99 dollars per barrel that we've seen over the last month or so cannot translate to a similar drop in pump prices.

But on top of that, the Euro has weakened against the dollar - a Euro now buys you 10 cent less dollars than it did 6 weeks ago. As crude oil is traded in dollars, the decrease in barrel prices have been offset by the drop in the EURUSD exchange rate.

So of the 4 elements of pump prices - oil price, EURUSD rate, taxes/duty and refining/transport/profit for suppliers - the last two would have stayed more or less the same but the exchange rate ate into the drop in oil prices.

To be honest, my gut tells me that there is a little bit of shenanagans about pump prices. But the industry is heavily scrutinised. I have no doubt if the AA or consumer watchdogs had even the slightest whiff of evidence of any price fixing they would be down on suppliers and garages like a tonne of bricks.

GetWithIt

Just a slight correction. Not all the taxes fixed. VAT forms, what, 23% of the pump price? As the underlying oil/dollar/refinery prices increases/decreases it too increases/decreases proportionately.

Fighting Irish

why aren't prices coming down? such a stupid question!

supply and demand!

Fighting Irish

Fighting Irish wrote: »

why aren't prices coming down? such a stupid question!

supply and demand!

The only reason prices have dropped in recent weeks is due to "demand destruction", the price was so high that some consumers stopped using as much of it, now there is sufficient to supply the market so the price has fallen.

Just think of all the cancelled journeys you would have made in recent months if petrol was cheaper, some people have got smaller cars or even stopped driving altogether.

runawaybishop

ferg01 wrote: »

I remember hearing a rep from the AA explaining how oil price movements upwards filter through to the forecourt v quickly because refineries pass on the increases much faster. Oil price movements downwards are "sticky" in that they take a while to feed through from the refinery. He also added that apparently, margins on fuel are razor thin - I used to believe this...

margins are 9 and 11%, or they were 6 years ago when i was involved.

yore

Altreab wrote: »

that and the fall of the Euro over the last few months as seen here it down from 1.33 to 1.24 and still dropping All oil bought and sold in US dollars.

Slightly off topic, but it's worth re-iterating this point for the people on these boards who propose the sh1te of Ireland reverting to the punt and devaluing as an easy an painless solution to all our economic ills

yore

yore wrote: »

Slightly off topic, but it's worth re-iterating this point for the people on these boards who propose the sh1te of Ireland reverting to the punt and devaluing as an easy an painless solution to all our economic ills

Staying in the Euro will force pay cuts on people, leaving the Euro will force price increases on imported goods.

A bit like going to the headmaster and being given the choice between the cane or lines!

yore

Deleted User wrote: »

Staying in the Euro will force pay cuts on people, leaving the Euro will force price increases on imported goods.

A bit like going to the headmaster and being given the choice between the cane or lines!

I have made a similar point to yours before, but used it against that strategy. On one level, devaluation is an effective cut across the board for the cost of domestic products and services (that have no external inputs). The equivalence gets grayer when you consider those who might be holding cash or assets in the country. If you have nothing, it makes no difference. Very few people literally have "nothing".

The same people who propose devaluation are often most vocal against cuts in wages etc. They don't realise that it's effectively the same as the cuts for the poorest people. And the wealthy will move their assets out before and bring it back after the process and be relatively wealthier than they were!

yore

yore wrote: »

I have made a similar point to yours before, but used it against that strategy. On one level, devaluation is an effective cut across the board for the cost of domestic products and services (that have no external inputs). The equivalence gets grayer when you consider those who might be holding cash or assets in the country. If you have nothing, it makes no difference. Very few people literally have "nothing".

The same people who propose devaluation are often most vocal against cuts in wages etc. They don't realise that it's effectively the same as the cuts for the poorest people. And the wealthy will move their assets out before and bring it back after the process and be relatively wealthier than they were!

Yes I agree with everything you say, that's why I used that analogy, as it is the wealthy have already moved their "wedge" out!

Back on topic, I expect petrol prices to continue falling over the next couple of weeks as there are still some drops "in the pipeline", assuming the Euro doesn't tank in the meantime.

Duggys Housemate

yore wrote: »

I have made a similar point to yours before, but used it against that strategy. On one level, devaluation is an effective cut across the board for the cost of domestic products and services (that have no external inputs). The equivalence gets grayer when you consider those who might be holding cash or assets in the country. If you have nothing, it makes no difference. Very few people literally have "nothing".

The same people who propose devaluation are often most vocal against cuts in wages etc. They don't realise that it's effectively the same as the cuts for the poorest people. And the wealthy will move their assets out before and bring it back after the process and be relatively wealthier than they were!

Unless the devaluation is signalled way in advance, people will keep money here, and they have to keep property here. What a devaluation does is share the pain, in fact, if we were to try and reduce wages by 20 percent over the next few years, it wouldn't reduce profits for local capitalists, they would increase. But a devaluation of 20 percent in currency, would affect wages and profits equally. Also any devaluation in wages without a devaluation in currency tends to be a devaluation on average but distributed unevenly, nobody in Google is taking a 20 percent cut, but people in construction are taking a 100 percent cut. This is not what you want, that is not the way to restore competitiveness.

The cost is inflation, but we can feed ourselves in this country, so the cost is actually born more by the comfortable, importing iPads, computers and cars and not the poorest who spend a lot of their money on food, and beer. Sir Arthur will look after them.

Capt'n Midnight

yore wrote: »

I have made a similar point to yours before, but used it against that strategy. On one level, devaluation is an effective cut across the board for the cost of domestic products and services (that have no external inputs).

We import about 90% of our energy so more or less everything has external inputs.

Imports would include Clothes, electronic goods, DVD's / cinema / TV shows, vehicles. http://economic-incentives.blogspot.ie/2011/01/irelands-import-performance.html half our imports are classified as "production materials"

Our main exports are expensive products like pharmaceuticals / semiconductors where labour costs aren't as important as capital costs.
Software and localisation have labour inputs but quality is important.

It doesn't matter if we make or import fertilizer since the production of it is so energy intensive. Long story short when you add in the cost of agri-diesel food ain't going to get cheaper if we devalue.

Anyone old enough will remember Pez dispensers and other sweets being imported or not from time to time depending on the relative exchange rates ?



If we leave the Euro then unless we peg to the Dollar or the Pound we will likely loose a lot institutional currency. And if we did peg to the $ or £ then we are screwed if either goes up relative to the euro (cf. Argentina) and importers are doubly screwed if either of them decide to devalue later on (more capital out flow)


People with savings will loose out if we devalue.
People with debts will loose out if we devalue, because the debts are in Euro.

Capt'n Midnight

Capt'n Midnight wrote: »

People with savings will lose out if we devalue.
People with debts will lose out if we devalue, because the debts are in Euro.

Only if the debt's are not with an Irish lender, if the mortgage is with an Irish bank then it will be converted to Punt Nua along with savings.

BIG BAD JOHN

Deleted User wrote: »

Only if the debt's are not with an Irish lender, if the mortgage is with an Irish bank then it will be converted to Punt Nua along with savings.

Who's to say, though, that the bank wouldn't convert the debt from the euro to the punt nua at the relevant rate of exchange. The Irish banks probably borrowed most of the money to give people mortgages from Germany whose banks will want repaying in euros.
Staying with the euro is the (right now, marginally) better option.

Capt'n Midnight

Deleted User wrote: »

Only if the debt's are not with an Irish lender, if the mortgage is with an Irish bank then it will be converted to Punt Nua along with savings.

a - are you sure ?

b - for those on variable / tracker mortgages the interest rate will jump because the banks have to charge more to pay off their Euro borrowings

c - if the punt falls against the Euro then interest rates will have to go up.

BIG BAD JOHN

BIG BAD JOHN wrote: »

Who's to say, though, that the bank wouldn't convert the debt from the euro to the punt nua at the relevant rate of exchange. The Irish banks probably borrowed most of the money to give people mortgages from Germany whose banks will want repaying in euros.
Staying with the euro is the (right now, marginally) better option.

If Ireland leaves the Euro either voluntary or is pushed, those debts will be defaulted on and the Irish banking system would be unable to raise interest rates too much due to the fact that the large scale mortgage default would be worse than losing money by keeping the rates low.

Duggys Housemate

BIG BAD JOHN wrote: »

Who's to say, though, that the bank wouldn't convert the debt from the euro to the punt nua at the relevant rate of exchange. The Irish banks probably borrowed most of the money to give people mortgages from Germany whose banks will want repaying in euros.
Staying with the euro is the (right now, marginally) better option.

They have to convert, as they converted the other way going in . We would leave the Euro at 1 punt nua = 1 Euro, so all is even until the markets step in and drag the punt lower.

btw, theoretically the punt should rise as we have a trade surplus.

K_1

Deleted User wrote: »

If Ireland leaves the Euro either voluntary or is pushed, those debts will be defaulted on and the Irish banking system would be unable to raise interest rates too much due to the fact that the large scale mortgage default would be worse than losing money by keeping the rates low.

But with devaluation comes inflation, and if inflation were to exceed interest rates then they'd be losing money either way. Interest rates would have to rise.

K_1

K_1 wrote: »

But with devaluation comes inflation, and if inflation were to exceed interest rates then they'd be losing money either way. Interest rates would have to rise.

True, we're screwed either way!

But a dose of inflation is the lesser of the many evils that will come with the Euro breaking.

Petrol could easily go to 1.80 a litre very quickly, imports of non-essential "stuff" will dive as people concentrate on the essentials.

Capt'n Midnight

Deleted User wrote: »

If Ireland leaves the Euro either voluntary or is pushed, those debts will be defaulted on and the Irish banking system would be unable to raise interest rates too much due to the fact that the large scale mortgage default would be worse than losing money by keeping the rates low.

Please explain why you think the debts will be defaulted upon, bearing in mind your explanation will also have to show how the same banks will be able to keep interest rates constant in a climate of the uncertainty they have created.

Capt'n Midnight

Capt'n Midnight wrote: »

Please explain why you think the debts will be defaulted upon, bearing in mind your explanation will also have to show how the same banks will be able to keep interest rates constant in a climate of the uncertainty they have created.

The Irish central bank will print until the cows come home, while defaulting on external debt!

Charity2020

I see petrol prices dropping.
Is this going to continue, or will they sneak back up again.?
It seems to be up 2 cents and back down 1 cent.

granturismo

iDonate wrote: »

I see petrol prices dropping.
Is this going to continue, or will they sneak back up again.?
It seems to be up 2 cents and back down 1 cent.

yes

seamus

Petrol prices are only going one way in the long run. We will never see prices below 3 digits again.

chin_grin

"One step forward, two steps back" (or that's how I remember the lyrics!).

https://www.youtube.com/watch?v=xweiQukBM_k

smash

my local Topaz has a standard rip off fee of around 5c above all other stations. I reckon it's because that's where the Garda fill their cars.

nozzferrahhtoo

You think it is confusing for you, here in Germany the petrol and diesel prices have been changing over the course of a day. With the max and min each day changing over a time frame of weeks.

For example a month ago I drove past three garages in the morning all of whom were charging 1.56 for diesel. Driving past the same garages that evening the prices were 1.38.

At the moment the daily fluctuation seems to be in the 1.36 to 1.44 range. So 8 cent rather than 18, but it is still somewhat weird that buying my fuel in the evening is always cheaper than the morning. Buying on a Thursday evening always comes out cheaper than a Monday evening too.

I can only guess at the thinking behind this. I know... from having worked in two Esso stations during my college years in Cork... the profit on fuel is actually very low for the Garage itself and that most of the profit comes from impulse buying of things like Chocolate, Drinks and sundry. So perhaps they have realised that impulse buying is higher on certain days and at certain times so they try to draw the customers in at those times. One is more likely to get a Mars Bar on the way home from work in the evening than one is at 8:30 when you leave the house full of breakfast for example.

That is all just my guess, there might be other good reasons for it but it all seems weird to me.

chin_grin

nozzferrahhtoo wrote: »

You think it is confusing for you, here in Germany....

Gross Gott! Ein herr von die Mutterland!

(my German is terrible!).

saiint

smash wrote: »

my local Topaz has a standard rip off fee of around 5c above all other stations. I reckon it's because that's where the Garda fill their cars.

even though its basicly the goverment paying for the petrol and doesnt come out of the gardas pocket

chin_grin

saiint wrote: »

even though its basicly the goverment paying for the petrol and doesnt come out of the gardas pocket

"Reg and mileage Garda?"

<spits out coffee and donut>

"Gerrawayouttadat!"

Charity2020

nozzferrahhtoo wrote: »

For example a month ago I drove past three garages in the morning all of whom were charging 1.56 for diesel. Driving past the same garages that evening the prices were 1.38.

Petrol and diesel prices got very close at one point, but there appears to be a marked difference now. Do petrol and diesel prices not go up and down at the same rate.?