Wednesday 25 April 2018

Falling oil prices not being passed on at the pumps

George Garvey

Despite a sharp fall in crude oil prices since late March, motorists have yet to see much of the benefit at the pumps.

A barrel of crude oil -- a purely notional measurement as oil hasn't been stored in barrels for decades -- consists of 42 US gallons or 159 litres.

With crude oil prices having fallen by €18 since late March that should translate into a reduction of 11.3 cent for every litre of petrol or diesel.

When 23pc VAT is added the price reduction should be even higher at just under 14 cent. So have the recent crude oil price reductions been passed on to Irish motorists? Have they what?

According to the AA, which monitors fuel prices nationwide, the average price of a litre petrol was 162.1 cent in March while the average price of a litre of diesel was 157.7 cent.

Average petrol and diesel prices actually rose in April reflecting the time lag between crude oil prices and retail pump prices for refined fuel.

In April the average price of a litre of petrol was 164.9 cent rising to 165.9 cent in May. It was only in June that average petrol prices fell, to 162.9 cent, still almost a cent higher than when oil prices peaked in March.

Even using April prices it is clear that average petrol prices should now be only marginally over 150 cent a litre if Irish motorists were receiving the full benefit of the fall in crude oil prices.

In other words, Irish motorists are being overcharged by about 12 cent a litre for petrol.

It's a similar story with diesel prices. The average price of a litre of diesel at the pumps peaked at 159.9 cent in April and by June had fallen by 6.3 cent to 153.6 cent.

If the full crude oil price reduction had been passed on, Irish motorists should be paying no more than 146 cent a litre meaning that Irish motorists are paying almost eight cent a litre over the odds for their diesel.

Indo Business

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