Engineered fuel prices

I fail to understand the actual reasons for the astronomic fuel price we are experiencing. There does not appear to be a shortage of all fuels and I can only assume it is due to there being a cartel amongst producers. This will result in the oil sheiks buying more gold plated Rolls Royces and palaces.

Read the news?

I'm not sure what the price of autogas (LPG) was before the increases, but I noticed yesterday our local Morrisons had it at 78p a litre, which seems to be a huge difference to petrol and diesel.

Rob

Well Bryan, it is not only in the UK fuel is expensive, our fuel prices this summer are the highest I have seen. As business returned to more normal levels after Covid-19 increased demand has driven the price of crude oil up. I guess the war in Ukraine has had an impact also although prices increased before the war started.

Thor

It's called price gouging.

Tony

It's called buying as little oil or gas from Russia as possible, which puts the demand and therefore the price up of all the other oil and gas. It's also why any German state buildings will no longer have hot water in them

The price has recently fallen due to China buying a lot less as whole cities are locked down.

Saudi Arabia is buying cheap Russian oil & gas and using it for its domestic market. Meanwhile, Saudi Arabia is selling its own very expensive oil & gas to the rest of the world, making a killing in the process and very neatly circumventing western sanctions against Russia.

It's could be a cold and expensive winter in the west.

Martin.

The prices were going up long before Russia invaded Ukraine. They said it was because of increased demand post Covid, but to be honest 'smoke and mirrors' comes to mind and whatever hot air we spout the choices are pay the price or don't pay the price.

Tony

Bloody hell what a world we live in, nothing changes does it?

Tony

Don't forget the oil to make the petrol you use today was bought 3 months ago when it seemed to be on a rapid upward trend. There are also funny effects from the futures market so don't bank on it dropping or rising unless yu are an expert in the field.
Although the profits being announced by various companies not just oil giants often seem huge they are really meaningless unless the size of the business is taken into account factoring in employee count and capital invested, and debt.

This morning, my wife mentioned that Shell and BP have reported their highest profits.

Allowing for supply and demand, Price gouging, to make up the shortfall when very few went anywhere and used fuel?

I couldn't possibly comment.

Howard

The density of a litre of gas is obviously different, but generally the UK is in an odd situation with respect to gas: we land a lot of gas that goes to Europe, and since a lot of Europe's gas is currently being restricted by Mr Putin, Europe is trying to get more from us - but we can only shovel so much through the pipelines in a day, so we often have gluts from day to day. The spot price (for delivery right now) has been swinging around all over the place in consequence.

Martin

It looks like we are being screwed by the Sheiks again, apparently they have been asked to release more oil into the market to bring the price down but that isn’t going to happen anytime soon, I fear for this winter and the crippling prices that people will have to pay for energy. Dave W

Price Gouging and other forms of profiteering are always likely when demand exceeds supply, but in general energy prices at the moment aren't being engineered by a conspiracy. I don't recall anyone complaining when the wholesale price of oil went negative in 2020. That was due to COVID suppressing demand, and it happened naturally. When a supertanker arrives at it's destination and can't unload because there is no spare tank capacity on shore, the oil starts costing big money.

There's no deity or human right that says things must be sold at a fixed price. Prices are determined by what people are prepared to pay, which means they go up and down, sometimes violently. The Wall Street Crash wasn't a local phenomenon in 1929, and it's worse now because 'people' means just about everybody in the world.

Predicting the future is near impossible, but the current difficulty depends on the outcome of Putin's attack on Ukraine. Since coming into power Mr Putin has aggressively used hard power to extend Russian influence. Arguably the west made a bad mistake in the past by tolerating his adventures, and thus encouraged he's gone a step too far. His plan was to quickly capture Kiev and replace the government with a Russian puppet. No doubt he thought the risk low because of previous appeasements, a strong perception of European disunity, and Europe's high-level of dependency on Russian Oil and Gas.

In practice, Putin's War hasn't gone to plan. The Russian Army encountered strong resistance and failed to topple the Ukrainian government. Europe and the US applied strong economic sanctions even though it's pushing up energy prices at home. NATO are supplying modern western weaponry to the Ukrainians and perhaps accurate intelligence from satellite and other high-grade sources, which could put an end to high intensity operations.

Putin's war has become expensively painful with no end in sight and Russia may even be losing it. If so, there's a strong possibility Mr Putin or his successor will have to normalise relations and allow trade to resume. Unlike Putin, Russia has nothing to lose and much to gain by stopping. But wars are horribly unpredictable and almost anything could happen. If I were Putin, as a last throw of the dice, I would try to break Europe's will to continue by cutting oil and gas exports entirely this winter in hope of triggering mass discontent everywhere. Things may get worse before they get better.

Point is, Arab sheiks and oil companies might well profit from this in the short term, but they aren't the prime movers. Huge and complicated forces are at play because billions of unhappy people are involved. I don't think anyone is in control.

Dave

Putin doesn't need to do anything. We're doing it to ourselves.

Martin.

Still a bargain compared to the price of bottled water.

Steam cars next !!

Those who think Diesel is expensive (which I agree it is) should give a thought to owner drivers of HGV trucks.

Was chatting to a driver who said his new Mercedes articulated truck manages between 5 - 7 mpg

That equates to £1.77 PER MILE (at its worst)

And we all wonder why everything has gone up in price - can't wait for the 'above inflation' pension increases

Record profits for the oil companies this year: LINK to price gouging

"Exxon Mobil and Chevron, the two largest energy companies in the United States, said on Friday that profits rose to record levels in the second quarter as they continued to reap the benefits of soaring oil and gas prices.

Exxon reported income of $17.9 billion for the three months through June, more than three times what it earned in the same quarter a year ago. Revenue at the energy giant jumped to $115.6 billion, from $67.7 billion a year ago. Chevron’s performance was similar, with profit more than tripling to $11.6 billion as sales rose to $65 billion, compared with $36 billion a year ago."

So that would be around 5 pence per mile for each ton for the max gross weight truck of 44 ton's. Which doesn't seem so bad considering. It's still a big cost hike though.

regards Martin