Pain at the pump? – blame the woke governments and not the oil majors!

In the UK, forecourt (pump) fuel prices are up +35% for both petrol and diesel (to 191p/199p respectively) from the last time the price of brent crude held above $120/bbl in Q1 2012. With the oil majors having all reported a strong increase in refining margins and downstream profitability, it must be tempting therefore suggest some possible price gouging is going on.  This however, would be incorrect as once one takes into account the approx +30% appreciation of the USD against the GBP since Q1 2012, the comparable increase in the GBP price of brent is actually over +26% from £78-81/bbl to £97-102/bbl currently. Adjust also for changes in petrol and fuel duty one can see that the net price of forecourt fuel prices before fuel duty and VAT is also broadly unchanged relative to the price of brent back at the start of 2021 when the price of brent crude was at $50/bbl (£37/bbl).  Unfortunately, having resolved one question, another one immediately springs forth. That is, if ‘pump’ prices are stable relative to underlying crude prices, but oil majors are reporting substantial increases in downstream profits on higher global refining margins, who’s taking up the slack and getting squeezed in the value chain?


Global refining margins rebound into Q1 2022


With thanks to the UK Gov road fuel data, that can be accessed here, below are some charts with which to explain.

The first is the data on forecourt fuel stations for the price per litre for Ultra Low Sulphur Petrol and Diesel, but excluding the distortions of the fuel duty for each and VAT. The key takeaway from this is the close alignment from 2015 of net pump prices to the GBP price of brent crude.

Forecourt fuel prices excl duty & VAT have broadly reflected crude prices


Mapping this relationship since the start of 2021 and therefore before the recent surge in fossil fuel prices suggests little overall change.

If UK motorists are looking for culprits for the current pain t the pumps, they ought to look no further than who was responsible for the net zero anti-fossil fuels agenda, the pointless conflicts with Russia and the most appalling economic and financial mismanagement of the country’s economy and finances which depreciated the currency and exacerbated the inflationary impacts.

No obvious evidence of price gouging here