An increase or decrease in CRUDE OIL PRICES may not affect prices at the petrol pumps. There are a few reasons for this:
There may already be existing stocks of petrol at the old prices.
The cost of refined petroleum represents only around 22% of the retail price of petrol.
(Source: UK Petrol Industry Association, 2009)
In many countries, the retail market has become increasingly competitive in recent years. This is certainly true in the UK, with the entry of the large supermarket chains, such as Tesco and Sainsbury, into petrol retailing in the early 1990s.
Supermarkets may subsidise the cost of petrol from profits on their other products, hence reducing the retail price.
Contracts between buyers such as British Petroleum, and sellers such as Venezuelan producers, are often agreed a minimum of three months in advance. These agreements are called FUTURES CONTRACTS, or futures for short.
Around 55% of the price of petrol and diesel at the pumps is government petrol duty and VAT.