UK Petroleum Industry Association
17th October 2008
Government Calls for Petrol Retailers to Reduce Prices
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".
Notes to editors:
Nick Vandervell +44 (0)20 7269 7604
Chris Hunt +44 (0)20 7269 7601
UKPIA represents the oil refining and marketing companies operating in the UK, which also own approximately 2,152 of the UK's 9,271 service stations.
UKPIA members own and operate the nine crude processing oil refineries in the UK.
More information can be found on UKPIA's website: click here for Fuel Prices Historic Data and Briefing Paper – Understanding Pump Prices.