Why The Fuel Price Is So High ?

[~ ~ Cal ~~]

Below is an extract from the Shell UK website, I have checked and it's okay to publish externally. As an employee I often find myself providing answers to some out the questions raised in here so thought the below would be useful ? :-

Interestingly petrol is cheaper than wine in terms of litres ! Food for thought - we just dont see oil/fuel as a luxury like wine but from a consumers perspective it ultimately is in my opinion. I have highlighted some important bits in bold

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Plain talk on the oil price

06-Aug-2008

Why does fuel cost this much, and what are we doing to help?

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Fuel prices are the highest they’ve ever been. We know that’s hurting. We hear this every day from our customers, our employees and their families. Why does fuel cost this much, and what are we doing to help?

The main reason is that demand is growing faster than supply, so prices have risen steeply for many commodities, including crude oil.

There is little that Shell can do about this. Although we are one of the largest of the world’s 3,500 oil companies, we produce only around 2.5% of the world’s crude oil. To supply the 46,000 Shell branded petrol stations worldwide, we have to buy over half of our raw gasoline and diesel from the open market. Just like our customers, we’re exposed to daily price fluctuations.

Fierce competition makes fuel retailing a high-volume, low-margin business. Most of our profit comes from production of oil and natural gas.

A large slice of the cost of a barrel goes to the countries where the oil is taken out of the ground as royalties and taxes. Most governments also apply tax when it is bought at the pump -- in some European countries, this can represent as much as 50% or more of the price drivers pay.

Of course, as the price of a barrel goes up, we make more money. And as one of the world’s largest companies, our profits are large. So, what are we doing with that money?

We’re using it to fund the largest investment program in our history and in our industry to boost supply and find new alternatives to oil. Demand will continue to grow, so lower prices depend on more supply and more choice in fuels.

In 2007, our capital investment increased to $27.1 billion and we expect it to grow again this year to about $35-$36 billion. The number of projects we have under construction has more than doubled since 2004 and we have over 50 large oil and gas projects underway, as well as many more smaller ones. Many of these are in increasingly difficult and costly locations like the Arctic and in deep offshore waters where the technical challenges are immense.

We’ve stepped up our investment into transport biofuels, particularly those using more sustainable advanced technologies. And we are producing liquid fuels from natural gas and unconventional sources like Canada’s oil sands.

We are introducing new fuel economy formulas and offer advice on fuel-efficient driving that help customers get more miles from each gallon or litre. Our work with vehicle manufacturers supports the introduction of more efficient engines. And we are investing in renewable energy sources like wind power.

Our profits are big, but so is the challenge ahead. We are investing massively now to help meet that challenge. It will take time before the full effect of these investments is felt, but in an industry that thinks in decades, they are essential to ensure we can help supply the fuel consumers will need for years to come.

More good reading in here :- http://www.clingendael.nl/ciep/publication...mp;type=summary

Hope it's useful folks

Regards

Calum Shand

[emoe]

offer advice on fuel-efficient driving that help customers get more miles from each gallon or litre.

How do we do that with any of the higher end performance vehicles?

And we are investing in renewable energy sources like wind power.

Hmm, subaru windmill attachment for the 2008 model??

Our profits are big,

Yes WE KNOW!!!

[~ ~ Cal ~~]

next time you put on your lipstick or check out your pension statement say thanks to the worlds oil companies - they all contribute heavily to your lifestyle my friend. I am just posting what I thought was a worthy read ?

[st3ph3n]

See I read that and I just see a lot of "it's not our fault we're making so much money".

I don't blame the oil companies from making big profits - they are a business not a charity.

However I think profits could be scaled back a touch and the government should scale back the tax a bit too. Make everyone just a little bit happier.

For the record - I just bought one of those v-power diesel £1.99 hats last night. So I really don't hate shell at all.

[bigal024]

I think the main gripe we have in the UK is the amount the government TAXES us on fuel, not Oil Company Profits.

Good read though Cal.

Edited August 6, 2008 by BigAl024

[badbaz]

I think the main gripe we have in the UK is the amount the government TAXES us on fuel, not Oil Company Profits.

Does anyone know what the government makes in fuel tax per year. More importantly how much that has increased (or maybe decreased) in relation to everything else, inflation etc.

The £3billion going into Northern Rock could have been used to discount V-power. For Scooby owners only obviously!

[emoe]

next time you put on your lipstick or check out your pension statement say thanks to the worlds oil companies - they all contribute heavily to your lifestyle my friend. I am just posting what I thought was a worthy read ?

Dont get touchy!!

I was commenting on what THE OIL company said, as i can read and did understand you posted what SOMEONE else had written.

PMT anyone?

[iainc]

See I read that and I just see a lot of "it's not our fault we're making so much money".

I don't blame the oil companies from making big profits - they are a business not a charity.

However I think profits could be scaled back a touch and the government should scale back the tax a bit too. Make everyone just a little bit happier.

For the record - I just bought one of those v-power diesel £1.99 hats last night. So I really don't hate shell at all.

You *bought* one? I was given mine when I filled up.

[st3ph3n]

Aye. My face got burnt the other day so decided I needed a hat. I did get £7.50 off my petrol though, so never mind.

[JohnSt]

Aye. My face got burnt the other day so decided I needed a hat. I did get £7.50 off my petrol though, so never mind.

I watched as your Missus was applying suncream to your already Beetroot Face, thinking at the time 'the horse had already bolted'

[scoob fae ork]

The thing i want to know is now that the oil has dropped over $20 a barrel why the petrol prices have NOT followed suit. The last time oil was at $118 petrol cost £1.14 a litre in orkney then oil shot to $142 a barrel and petrol in Orkney shot to £1.27 and diesel £1.42 and now were back to $118 a barrel but the petrol is still £1.24 and diesel at £1.41. I mean WTF who is dragging there heals here

[~ ~ Cal ~~]

The thing i want to know is now that the oil has dropped over $20 a barrel why the petrol prices have NOT followed suit. The last time oil was at $118 petrol cost £1.14 a litre in orkney then oil shot to $142 a barrel and petrol in Orkney shot to £1.27 and diesel £1.42 and now were back to $118 a barrel but the petrol is still £1.24 and diesel at £1.41. I mean WTF who is dragging there heals here

I know what you mean but lots of these stations are franchises which can do as they please ..........

http://news.bbc.co.uk/2/hi/business/7518516.stm

[thewelsho]

The thing i want to know is now that the oil has dropped over $20 a barrel why the petrol prices have NOT followed suit. The last time oil was at $118 petrol cost £1.14 a litre in orkney then oil shot to $142 a barrel and petrol in Orkney shot to £1.27 and diesel £1.42 and now were back to $118 a barrel but the petrol is still £1.24 and diesel at £1.41. I mean WTF who is dragging there heals here

It has come down a bit though, in Glasgow we can get unleaded for 110 and Tesco 99 for 115. I was shocked at how "cheap" petrol had become! Amazing to think that 115 is cheap. Just that I haven't been using the Scooby much and haven't been to the petrol station in nearly a month, so I was pleasently surprised and long may it continue

[st3ph3n]

I watched as your Missus was applying suncream to your already Beetroot Face, thinking at the time 'the horse had already bolted'

Thanks for that John.

As it was pishing it down on Saturday morning I hadn't prepared for it, but took precautions on the Sunday. The horse had already bolted, but I was trying to limit the distance from the stables it had gone.

[richscooby]

Cal,

Glad you posted that, I worked for Shell for 13 years, and all I ever got when I was at home was why does petrol cost so much???

I've tried explaining but people always think its the oil companies, the only winner in this country with high fuel prices, is Mr Brown and his cronies!

Just think what our fuel prices could be if we were independant (with the OIL, not without) in Scotland.

As an oil producing nation we pay the highest at the pumps, I've lived in other oil producing countries and no-one pays what we do, and we can make the stuff.

Its NOT the oil companies fault, they are in business to make money, just like any other business.

regards

Richard

[david_taylor]

Sign up to these...I have. Doubt it will make a difference but better than doing nothing:

http://petitions.pm.gov.uk/UNFAIR-VED/ Against proposed changes to vahical tax

http://petitions.pm.gov.uk/Cut-fuel-price/ Reduce tax on petrol by 20p a litre

[mono775]

i don't think that's right at all

this is a very inportant topic - and i agree with tj_666 that this should be talked about as he said we are a car club !

also - i have been asking time and time again the same question ?

why can't we talk about fuel prices ?

but i never get a responce - i see that tj_666 has had a responce even if not a good one

i also sort of agree with richscooby

as an oil producing nation we should have our own oil staions and be able to serpliy ourselves - not ship it half way round the world and back again wich cost us even more to do

i think mr brown needs to get his act together before things get realy out of hand - if fuel prices went up in the ( us) like they do hear there would be riets -

i don't think it will be long before things start going that way over hear

anyway i'm glad someone else has started this topic - maybe this one wont be removed !

[~ ~ Cal ~~]

Domestic Gas is an issues too ( 35% rise) - we're scuppered here as .........

a ) our supplies in the UK are dwindling big time ( have been for some time). Hence the new circa $9 billion Ormen Lange pipeline from Norway to UK ( 42" diameter and 1200km long !)

b ) we never had decent storage facilities in the first place so we sell it cheap to mainland Europe in the summer ( then the Dutch often pump it underground). Then fooloishly we buy it back in the winter when the prices have rsisen sharply due to demand....................madness eh !?

Cal

[Richie Cross]

It has come down a bit though, in Glasgow we can get unleaded for 110 and Tesco 99 for 115. I was shocked at how "cheap" petrol had become! Amazing to think that 115 is cheap. Just that I haven't been using the Scooby much and haven't been to the petrol station in nearly a month, so I was pleasently surprised and long may it continue

Me too. Saw regular unleaded for 110 and thought 'wow..amazing'.....but it's not really!!!

Better than it was but how long will it last!!??

[superstar_tradesman]

Sign up to these...I have. Doubt it will make a difference but better than doing nothing:

http://petitions.pm.gov.uk/UNFAIR-VED/ Against proposed changes to vahical tax

http://petitions.pm.gov.uk/Cut-fuel-price/ Reduce tax on petrol by 20p a litre

everyone should sign up to these and at least try and make ourselves heard.

[thewelsho]

everyone should sign up to these and at least try and make ourselves heard.

Done it.

[oobster]

Found this on b3ta & thought it was amusing

[craigdmcd]

Absolutely Class