Originally Posted by Northern Tim
...and all the while, BP and Shell are reporting record profits. They are "blaming" these increased profits on the increased cost of crude oil. Am I missing something, or could they not just reduce the retail price if their profits are racing as they are?
The oil majors ARE making big profits, but it's not in retail or at the pumps. They have stakes in many large oil fields which they have bought/invested in over the last twenty+ years. There were years (when crude was at $10 a barrel) where they made very little from these fields. Now it's payback time.
They also make alot of money on refining margins, i.e. turning a barrel of crude into 30% petrol, 30% diesel, 10% gasoline, 10% LPG, 10% fuel oil, 10% naphtha, etc....Over the last few years, these product prices have been very high in relation to crude prices. So the refineries are at full blast (5 years ago they ran at about 75%), and they are coining it in.
The market decides the price. No reason why BP should sell it's petrol in the UK cheaper than the Americans would buy it. So they don't.
Then, as Codprawn says, the rest is tax. And because the tax is a %, it has increased even more quickly. The government is enjoying a huge tax windfall thanks to the increased oil prices.
When UK/US complains to OPEC about high oil prices, OPEC quite rightly turns round and says, well if you think it's so high, take some tax off it.
I think that when petrol starts to hit £1.50 a litre and people really start getting pissed off, the government will be forced to lower tax rates. There is at least that 'safety net' against even higher prices for the time being.