Oil price

[Gordaleman]

The oil price has dropped by half since the start of the year and is currently trading (Brent Crude) at about $35 a barrel.

Are people as sceptical as me about how it will affect the prices on the garage forecourts?

I know it's not just about the price and that most of the price of petrol is tax, but even so. I'll bet the price goes down a lot more slowly than it goes up when there's a recovery.

Disclaimer: I have no car at the moment, so I have no axe to grind.

[Billy Balfour]

I wonder if the govt will take advantage and increase fuel duty?

[houseboy]

I have an axe to grind and I'd like to grind it on the heads of the oil billionaires and senior management of the petrol companies. When the price of oil drops it 'takes a little while for the drop to filter through to the pump's'. When the price of oil goes up it goes up at the pumps so fast you can't get to the garage quick enough after seeing the news before it has increased. Bloody criminals.

[Bosscat]

Could we see a £1 a litre again soon

https://www.thisismoney.co.uk/money/car ... pumps.html

Am not holding my breath though

[Stayingup]

I have an axe to grind and I'd like to grind it on the heads of the oil billionaires and senior management of the petrol companies. When the price of oil drops it 'takes a little while for the drop to filter through to the pump's'. When the price of oil goes up it goes up at the pumps so fast you can't get to the garage quick enough after seeing the news before it has increased. Bloody criminals.

By petrol Companies you mean the public outlets? Because it is them who will forestall a drop in the price to the public.

Airlines are suffering now that fewer people are flying and the drop in the oil price will help them, but sadly not enough to prevert a few more Flybes if this Virus issue is not solved soon.

[Gordaleman]

By petrol Companies you mean the public outlets? Because it is them who will forestall a drop in the price to the public.

Airlines are suffering now that fewer people are flying and the drop in the oil price will help them, but sadly not enough to prevert a few more Flybes if this Virus issue is not solved soon.

Big organisations like airlines 'Hedge' their purchases months in advance to try and even out ups and downs in the price. Normally, with the price as low as it it is right now they would probably be buying futures like mad at the moment. Question is, do they have the cash flow to do it right now?

[thatdberight]

I have an axe to grind and I'd like to grind it on the heads of the oil billionaires and senior management of the petrol companies. When the price of oil drops it 'takes a little while for the drop to filter through to the pump's'. When the price of oil goes up it goes up at the pumps so fast you can't get to the garage quick enough after seeing the news before it has increased. Bloody criminals.

Not borne out by fuelwatchdog.co.uk's data (not absolutely granular but pretty good) and in fact we've been shielded from the worst rises quite a few times.

historic-car-fuel-prices.jpg (115.16 KiB) Viewed 1668 times

[karatekid]

It's the 'Feather and Rocket' effect. Prices come down like a feather but go up like a rocket.

[houseboy]

Not borne out by fuelwatchdog.co.uk's data (not absolutely granular but pretty good) and in fact we've been shielded from the worst rises quite a few times.historic-car-fuel-prices.jpg

Have you really just done this? Have you really gone online to seek this out? Well done mate, you have more time in a day than I have. Not to worry.

[thatdberight]

Have you really just done this? Have you really gone online to seek this out? Well done mate, you have more time in a day than I have. Not to worry.

Took less time than it took for you to write your first post. Just thought some data might help the debate.

[houseboy]

Took less time than it took for you to write your first post. Just thought some data might help the debate.

It's fine mate, honest. To be fair to you you have at least posted the actual graph on here which is commendable, too many just post a link because they can't be bothered, which means I don't see it because unless it's comedy or the occasional news item I don't click on links. Cheers.

Oh by the way it doesn't take me long to type, been doing it for years for a living.

[Spiral]

It's fine mate, honest. To be fair to you you have at least posted the actual graph on here which is commendable, too many just post a link because they can't be bothered, which means I don't see it because unless it's comedy or the occasional news item I don't click on links. Cheers.

Oh by the way it doesn't take me long to type, been doing it for years for a living.

I know you just said you don't click on links but I'd strongly encourage you to make an exception and have a look at this here.

[Paul Waine]

As mentioned above, the price of Dated Brent, which is the global benchmark for crude oil, is only part of the retail price of petrol and diesel in UK. Gov't tax, road fuel duty and VAT are by far the great part. And, the cost of refining plus running retail operation has to be taken into account. So, if crude oil has fallen by half, don't expect 65p per litre at the pump, tax and VAT will be more than that (without checking HMRC for exact tax figs).

Airlines are mentioned above. The price fall started because airlines stopped buying jet, because flights were cancelled, because people weren't buying tickets. Airlines jet hedging programmes are complex, they need to have a forecast of ticket sales, as well as a sense of the future price of oil. And, they need to have a sense of what their competitors are doing - no point hedging fuel price at USD 65 when others didn't hedge and are buying at just USD 64, never mind 20 dollars below your hedge price... Don't forget that hedging requires a good credit status, not something that Flybe or many other airlines can afford.

Latest piece is OPEC, well Saudi Arabia v Russia. Too much crude oil for the world demand, so OPEC wants to cut back production, but Russia, who isn't a member, but had for the past few years been co-operating, said not cutting back. So Saudi is turning up production.

We will see lower fuel prices, but it won't directly match fall in brent.

[houseboy]

I know you just said you don't click on links but I'd strongly encourage you to make an exception and have a look at this here.

Mint...you got me good.

The tea boy turned good (actually if you ignore the Stock/Aitkin/Waterman crap music Astley is actually a very good singer. Always was.).

I like the young lady on there though.

[paulatky]

All brought about because of corona virus fears . Less people travelling !!!

[kentonclaret]

Saudi Arabia manipulating the production of oil and therefore the price per barrel to punish other countries.

Whatever next?

Must have learnt that lesson from Donald Trump who has consistently weaponised trade to threaten trading partners like China and Mexico.

[IanMcL]

Saudis sorting Russkies.

[Paul Waine]

Saudi Arabia manipulating the production of oil and therefore the price per barrel to punish other countries.

Whatever next?

Must have learnt that lesson from Donald Trump who has consistently weaponised trade to threaten trading partners like China and Mexico.

To be fair, Kenton, Saudi/opec been doing this since 1971. They would argue "big oil" didn't pay a fair price for Saudi crude before then, somewhere around 6 dollars per barrel.

[KateR]

Oil prices, OPEC & other producing countries is a complicated balance, the China and then global recessions drastically reduced the price of crude while the US Shale Oil market his simultaneously, OPEC & Saudi in particularly tried to drive down to where Shale was not economical. Due to Shale there has been an abundance of oil for markets post China boom, this virus is hurting short term and will see how it all works, however the fall is mainly due to Russia not playing ball with Saudi, therefore OPEC.

Oil reserves and time have been the mainstay of all companies and for decades there have been predictions about the tipping point where the global consumption his higher than the reserves. Therefore, that was a main driver in finding alternative energy decades ago, this also drove big oil in to the hard to get to oil, Arctic, deep water and Shale, each being far more expensive to find and drill, produce to market but kept them well ahead of the foretasted Tipping Point, while also limiting alternative fuel research but this is changing big time and it's hard to get your head around a young girl called Greta making such an impact in this change of attitude.

Refineries make very little profit in reality, additionally oil reserves are huge and these are what supplies refineries not crude from a pipeline, therefore the refineries are operating for quite a while prior to see any benefit to a drop in oil price. Depending on how long a fall lasts and stays at a lower price mandates the oil reserves actual cost to the refineries and therefore to consumers regarding fuel from refineries to customers.

Given the environmental concerns it is interesting to look at alternative fuels of today and what impact have they had over the recent decades, not that much in reality, however hydrogen in particularly will be a fuel source of the future I think, not short term future but not that far away.

[Stayingup]

Big organisations like airlines 'Hedge' their purchases months in advance to try and even out ups and downs in the price. Normally, with the price as low as it it is right now they would probably be buying futures like mad at the moment. Question is, do they have the cash flow to do it right now?

Probably by 90, 120 day and longer payment agreements. Otherwise the whole system would grind to a halt.

[Paul Waine]

Probably by 90, 120 day and longer payment agreements. Otherwise the whole system would grind to a halt.

I doubt many airlines gets extended credit from suppliers, best will be settled 5 days from supply, the weaker (financially) will cash settled day of supply, maybe cash in advance.

Same applies on potential hedge transactions. Yes, I'd sell them a call option any day, with prompt cash terms. But, I was always inclined to say no on costless collars and similar structures. Swaps would always require credit annex and cash collateral terms.

Take a look next time you are on a plane at plate that has the owner's name on it. It's there so the lessor can claim the plane back when airline goes bust.

[mdd2]

I wonder if the govt will take advantage and increase fuel duty?

Nailed on certainty.