Saturday, 6 December 2014

Average US gasoline prices plummet at the pumps, but do we see the same in the UK?

According to the Triple A website (American Automobile Association) prices at US gas pumps have fallen from an average of $3.27 a gallon a year ago to $2.76 today. That is a fall of $0.51. Even better, the fall for just the last month is huge $0.28 a gallon.

So, US gas prices at the pumps have come down by over 15% in the last year and 9% in the last month.

So why is this? Well the price of crude oil has fallen by 34% in the last year, so American motorists might feel a little aggrieved that the cost savings are not being passed onto them.

But what of the UK?

Well, in November 2013 the average price of petrol in the UK was £1.33 per litre and today it is £1.23 per litre. A fall of 7.5%. Wait a minute! A fall of just 7.5% when the price of crude has gone done by 34%? Yes, a larger part of what we pay in the UK is tax, but that shouldn’t matter. Either the government or the petrol companies are ripping us off and not passing on the benefits of falling crude oil prices.

Yes, I know we live in a free market economy, but this is ridiculous.


VStar Lady said...

Gary Canadians have been enjoying fluctuation gas prices that would drive Americans to riot over the past few years. Although prices are half the British price per gallon it has been nothing to see the price jump 15C per litre (that's 60C a gallon) overnight. Tax is part of it but we've also had a few major companies charged with price gouging. It hasn't stopped them. This week(over 4 days) prices hit a low of $1.06 per litre then jumped to $1.13 and then dropped back to $1.09. What would Americans say if the price of gas jumped 28C a gallon overnight? Ah, but we have universal health care!!!

Robert Wilson said...

I think part of it is how gas is shipped and processed. I don't know if and how many refineries are in the UK/Europe as a whole.

In the US, nearly all of the refineries are in the south...and gas is generally cheaper there. The further north you go, the more expensive it gets. Taxes do play a part but shipping costs matter as well.

I also think that Americans have reached the upper limit of their tolerance for gas prices. When gas prices where at their peak, our local public transportation service reported a nearly 300% uptick in ridership. So much so they added new buses and routes to the area, which in Republican controlled Florida was unheard of.

Gas prices have dropped and ridership on the buses has dropped somewhat but is still higher than it was five years ago at this time. There was also a noticeable uptick in scooter/cycle sales at that time.

While it may not be a sea change in how we American's see the auto, I think such things are helping to control the price of gas in the US more than people want to admit.

Trobairitz said...

Here in Oregon we typically pay the 2nd highest gas prices in the lower 48 states.

While we were paying $4 a gallon or above a year ago it sure is nice to see $2.96 a gallon at the pump right now for regular.

A large portion of ours is tax as well since we have no sales tax. Of course this does not explain why the UK prices have not dropped more.

The Oil companies are making entirely too much money.

Dan Diego said...

Start fracking! It'll force OPEC to change their tune for you, too. (I know, it'll never happen.)

Gary France said...

VSL – Those are huge short-term fluctuations that many people would not like. In the UK we too are used to regular fluctuations in fuel prices, but ours are nearly always upwards, albeit in small doses at a time.

Gary France said...

Robert – Refineries are all over Europe / UK. We tend to ship crude oil in and refine it here. We have bulk shipping costs to get the crude to the UK, but reasonable shipping costs of the final petroleum products. That is except those final products are shipped by road and the fuel costs for those trucks is expensive! As with your experience, many drivers in the UK simply cannot afford to pay for fuel any longer and have to travel by public transport, which is generally of a high standard. That is one of the reasons the government taex fuel so high, to encourage the use of public transport systems.

Gary France said...

Trobairitz – Both the oil companies and the UK government. I would love to pay $4 a gallon…..

Gary France said...

Dan - I am not so sure you are right. OPEC is currently lowering the cost of crude oil considerably. They have many years of huge profits that enables them to do that, but they must be suffering now.

George Ferreira said...

Gary, I don't want to upset you even more but gas in NJ has gone below $2.
Some people have reported seeing gas at $1.89 a gallon of regular. By my house it's $2.13
Have a Happy New Year :-)

Gary France said...

George - That is both great news and depressing at the same time!