Why are petrol prices changing so much?

It’s one of the biggest frustrations for any driver…you pull up to the pumps and the price has changed again! Recent increases have been blamed on tax and the panic buying of last month, but in fact the fluctuations are much more than just that…

Oil prices

The cost of oil has been volatile lately, due to natural disasters, problems in the Middle East and the worldwide economic crisis. The AA’s April report on fuel noted: “Since mid March, the oil price has tumbled more than four per cent yet NW Europe wholesale petrol has remained above the $1200-a-tonne benchmark that set record pump prices in July 2008 and May 2011 – the pound being significantly stronger on those previous occasions.”

Falling sales

Since the credit-crunch, demand for fuel has dropped by 20% – in fact in the US January was back to 2001 levels. This has caused the closure of a number of oil refineries and inevitably pushed costs up. AA President, Edmund King explains: “Filling up a 50-litre tank costs more than some families spend on food each week.”

Whilst many people have the option to change their lifestyle and rely on public transport or invest in a bicycle, transport providers do not have that opportunity and are the unfortunate victims of others refusal to pay such high prices.

Regional variance

Up and down the country prices vary greatly, this is down to a few things – the company running the petrol station, the size of it’s customer-base and the local competition. Whilst it is never going to be the case that bigger stations are unaffected by declining sales and rising oil prices, they are able to deal with fluctuations better. Some stations will also have bigger storage tanks and can therefore buy more in bulk.

The trick is to shop around, if you do journeys to parts of the country where the fuel is generally cheaper, aim to top up there.

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