UKPIA Responds to Government Call on Petrol Retail Pricing
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Monday, 20 October 2008 |
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Speaking on the recent calls by the government for petrol retailers to
reduce prices at the pump, the UK Petroleum Industry Association
(UKPIA) the representative body for the major fuel refining and
marketing companies in the UK, commented that prices at the pump do
follow movements in crude price.
Chris Hunt , Director General of UKPIA said ‘Pump prices inevitably follow movements in crude price – there is a lag both up and down before it feeds through, but nonetheless price movements follow each other.’ He continued ‘UK refiners and fuel retailers consistently produce the cheapest pre-tax prices for petrol and diesel in Europe – however, duty and VAT make up to 65% of the pump price. It is therefore, pre-tax, an extremely competitive market that delivers value for consumers'.
Explaining why prices can vary between petrol stations, Hunt commented ‘Petrol retailing is a high volume low-margin business and price competition is particularly fierce. Prices will vary from service station to service station depending on total throughput and proximity to supply terminals. Frequently, filling stations associated to supermarket outlets are able to sell large volumes of fuel particularly to people doing their weekly shopping, often cross-promoting a fuel discount to the amount spent in the store. Smaller filling stations have less volume to recover their overhead, therefore prices will vary’.
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