The rising price of petrol, when will it end?

richVSrich

oh just came across this... some amazing looking designs!!

http://cargocycling.org/riding_type/family-cycling

jedster

I'm afraid I have a professional interest in this subject.

I'd make a few points:

a) the commodity (crude price) element of the pump prices has risen a lot over the last 6 years as we have need to develop new more expensive sources of supply. This trend will probably continue a bit but the big adjustment has been made. I don't think crude prices need to be a lot higher in real terms in 20 years time. The main reason for this is that, e.g., Canada can produce A LOT of oil from oil sands at the current oil price. Other reasons are that electric cars, gas powered vehicles, etc will become pretty competitive at current pump prices

b) the refining and marketing part of the pump price is not that big - generally the big oil companies have been trying to reduce their presence in this bit of the industry (e.g., BP and Shell have closed or sold their UK refineries) because it doesn't make much money

c) a lot of the cost is tax BUT THIS IS NOT DUMB OR UNFAIR
I reckon this is probably the least well understood bit so I'll try to explain.
If there was a totally free market in oil (i.e., no OPEC) loads of people would be rushing to produce the remaining easy oil. There is quite a lot of oil that could be developed in the Middle East at $10 rather than the current $120 bbl. This would displace the most expensive oil from the market (oil sands, ultra deep water, etc) which costs about $80-90. The price of oil would fall and Saudi, etc would make less money. So OPEC controls supply to keep the market snug. The more economically minded among you will have realised that what I just wrote would suggest that the oil price should be $80-90 not $120. So why is it $120? Well, partly because it takes time to develop new supply and the market is worried about disruptions to supply in the short term (Iran, etc). Also because OPEC (meaning Saudi mainly) are carefully trying to find a price at which they maximise profit margins without killing demand.

(Aside - Although oil demand is pretty inelastic in the short-term, it does respond to high prices in the longer term (people choose more fuel efficient cars, etc). Even in the short-term there is evidence that once the price gets above $100, American's do reduce the number of 50 mile round trips to Walmart in their V8 trucks...
Someone else pointed out that the US has a much higher per capita oil consumption than Europe and Japan. This is, in large part, because they tax petrol much less. We care about fuel economy much more because we pay higher fuel prices)

So where am I going with this....

Well basically, if we cut fuel duty OPEC would do the same calculations about how what crude price they could charge without killing the market and work out that if we were willing to pay £1.50 a litre before and that the Treasury had reduced their share then that left more room for the crude portion to expand... they'd tighten supply, crude would go up and we'd be back where we started just with the money going to the oil producers rather than paying for our public services.

Again the smarter among you will have realised that this implies that the US (with low fuel taxes) is stupidly shipping huges amounts of money to OPEC which they could be retaining at home. Yes. Why - because it is tricky to undo cheap fuel - it's a big country, people have chosen to live miles from work, they have chosen to buy ridiculous pickups, there is no public transport. They are stuck in a hole that the politicians dont have the guts to get them out of.

So... high fuel duty is a good thing. Cutting fuel duty would be dumb. We all just have to suck up the prices. And we will do, because while we spend a lot on fuel it still offers good value for money versus the alternative ways of getting around for a whole range of journeys.

DonDaddyD

davis wrote:

DonDaddyD wrote:

£1.39.9 is steep by any stretch of the imagination.

But that's just it -- it isn't expensive for the amount of work to get it, and the work that it can do for you.

This just makes no sense.

I don't fill my car up thinking

"Gee! This petrol was so easy to obtain and it's gonna work so hard for me".

No.

"I think purely about the dent it puts in my wallet and the fact that it would cost £400 a month to drive to work."

davis

DonDaddyD wrote:

davis wrote:

DonDaddyD wrote:

£1.39.9 is steep by any stretch of the imagination.

But that's just it -- it isn't expensive for the amount of work to get it, and the work that it can do for you.

This just makes no sense.

I don't fill my car up thinking

"Gee! This petrol was so easy to obtain and it's gonna work so hard for me".

I meant the work involved in drilling, refining, shipping, and distributing it so that it's easy for you to pump into your car.

"I think purely about the dent it puts in my wallet and the fact that it would cost £400 a month to drive to work."

Now think about the effort it would take you to make the car travel that 3000 miles[1] -- let alone at ~50 mph -- without that fuel.

Sure, it's costing you a lot to keep a car going, but there's actually quite a lot of work involved in that simple-sounding everyday process.

1: (3000miles/50 miles per imperial gallon *1.40GBP per litre =~ 380 GBP)

rick_chasey

davis wrote:

DonDaddyD wrote:

davis wrote:

DonDaddyD wrote:

£1.39.9 is steep by any stretch of the imagination.

But that's just it -- it isn't expensive for the amount of work to get it, and the work that it can do for you.

This just makes no sense.

I don't fill my car up thinking

"Gee! This petrol was so easy to obtain and it's gonna work so hard for me".

I meant the work involved in drilling, refining, shipping, and distributing it so that it's easy for you to pump into your car.

"I think purely about the dent it puts in my wallet and the fact that it would cost £400 a month to drive to work."

Now think about the effort it would take you to make the car travel that 3000 miles[1] -- let alone at ~50 mph -- without that fuel.

Sure, it's costing you a lot to keep a car going, but there's actually quite a lot of work involved in that simple-sounding everyday process.

1: (3000miles/50 miles per imperial gallon *1.40GBP per litre =~ 380 GBP)

Compared to what it used to cost, or what it costs in the states for example, it's pretty expensive.

richVSrich

Rick Chasey wrote:

davis wrote:

DonDaddyD wrote:

davis wrote:

DonDaddyD wrote:

£1.39.9 is steep by any stretch of the imagination.

But that's just it -- it isn't expensive for the amount of work to get it, and the work that it can do for you.

This just makes no sense.

I don't fill my car up thinking

"Gee! This petrol was so easy to obtain and it's gonna work so hard for me".

I meant the work involved in drilling, refining, shipping, and distributing it so that it's easy for you to pump into your car.

"I think purely about the dent it puts in my wallet and the fact that it would cost £400 a month to drive to work."

Now think about the effort it would take you to make the car travel that 3000 miles[1] -- let alone at ~50 mph -- without that fuel.

Sure, it's costing you a lot to keep a car going, but there's actually quite a lot of work involved in that simple-sounding everyday process.

1: (3000miles/50 miles per imperial gallon *1.40GBP per litre =~ 380 GBP)

Compared to what it used to cost, or what it costs in the states for example, it's pretty expensive.

Indonesia = about 3 litres for £1

but stuff is a lot cheaper generally, wages are much lower than here...its all relative right?

DonDaddyD

davis wrote:

I meant the work involved in drilling, refining, shipping, and distributing it so that it's easy for you to pump into your car.

Heh, sometimes people on this website are too smart for their own good. When I'm at the pump I don't think

"Gee this petrol really had to work hard to get here, what with the drilling and refining and shipping and distributing.... "

What layman thinks about that? No, they look at the nearest comparative thing. The immediate price. £1.39.9 per litre, which at the pumps is expensive the most expensive it has been.

Now think about the effort it would take you to make the car travel that 3000 miles[1] -- let alone at ~50 mph -- without that fuel.

Sure, it's costing you a lot to keep a car going, but there's actually quite a lot of work involved in that simple-sounding everyday process.

1: (3000miles/50 miles per imperial gallon *1.40GBP per litre =~ 380 GBP)

Merciful lucifer, dude! I read the Sun! I don't care about pushing my car to the nearest petrol station basking in the glory of getting there and appreciating the value of effort. All that matters to the lay person at the pump is the cost of filling the car up at the pump. At the pump £1.39.9 is really expensive. £20 is feels like filling the car up with a tenner 4 years ago and I don't even bother putting £5 in anymore.

davis

Ah, so you're aware of the price, but not the value?

I see.

iPete

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Very insightful post jedster!

DonDaddyD

Davis, I get what you are trying to say and you are probably right. But in real terms "at the pumps" which is the perspective most will only ever and can ever comment on, it really isn't like what you're saying.

If my Office moved to where I think it wants to I simply couldn't afford to drive there £400 a month and train out into Basildon would be impractical. As it stands trips to Essex are becoming increasingly more difficult.

Petrol, I feel isn't relative to the general value of the £. £20 should be filling your car up a lot more, unless £20 is no longer a lot of money.

daviesee

Still better value than water at 1.65 :shock:
http://www.stuffbackhome.com/perrier-sp ... er-1l.html

DonDaddyD

iPete wrote:

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Actually they do as they form up the majority of the electorate for all parties. You'll find legislation, policy, tax and benefits is designed/redesigned to suit the needs, wants and meet the expecation of the voting public - I.e. the lay-man

DonDaddyD

davis wrote:

Ah, so you're aware of the price, but not the value?

I see.

I think that is a fair assessment. When anyone 'lay' complains about the cost of anything these days it's usually about the price and not the value. If is about the value it's about the value they get from the moment they paid for said item (petrol) until it wears out.

Most don't consider how it got there in the first place.

Consumerism.

davis

DonDaddyD wrote:

Davis, I get what you are trying to say and you are probably right. But in real terms "at the pumps" which is the perspective most will only ever and can ever comment on, it really isn't like what you're saying.

Yup. It costs a lot to run a car. It's a shame because we've become so dependent on them.

[/quote]

If my Office moved to where I think it wants to I simply couldn't afford to drive there £400 a month and train out into Basildon would be impractical. As it stands trips to Essex are becoming increasingly more difficult.

Out of interest, where are they thinking of moving to? Sounds like an evil commute...

iPete

DonDaddyD wrote:

iPete wrote:

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Actually they do as they form up the majority of the electorate for all parties. You'll find legislation, policy, tax and benefits is designed/redesigned to suit the needs, wants and meet the expecation of the voting public - I.e. the lay-man

In that case the current price meets the expectation and needs of the voting public, whats the kerfuffle?

DonDaddyD

I don't believe in moving for the purposes of work - i.e. moving closer to work.

So when we do move, hopefully, it will be further out of London but in the same South West area. The end result will mean that I will be further away buy bike but marginally closer by car.

DonDaddyD

iPete wrote:

DonDaddyD wrote:

iPete wrote:

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Actually they do as they form up the majority of the electorate for all parties. You'll find legislation, policy, tax and benefits is designed/redesigned to suit the needs, wants and meet the expecation of the voting public - I.e. the lay-man

In that case the current price meets the expectation and needs of the voting public, whats the kerfuffle?

Stop trying to work brain on me. At present the price doesn't meet the need of the voting public and if the price keeps rising we may very well see a disgruntled voting public.

bails87

DonDaddyD wrote:

I don't believe in moving for the purposes of work - i.e. moving closer to work.

So when we do move, hopefully, it will be further out of London but in the same South West area. The end result will mean that I will be further away buy bike but marginally closer by car.

If you didn't live in the South West then maybe your commute to the London area wouldn't be so bad
Also, you read the Sun? I'm not angry, I'm just disappointed.....

DonDaddyD

bails87 wrote:

DonDaddyD wrote:

I don't believe in moving for the purposes of work - i.e. moving closer to work.

So when we do move, hopefully, it will be further out of London but in the same South West area. The end result will mean that I will be further away buy bike but marginally closer by car.

If you didn't live in the South West then maybe your commute to the London area wouldn't be so bad
Also, you read the Sun? I'm not angry, I'm just disappointed.....

I'm not moving from South West London. South East London is one big traffic jam. North London (all of it) I just don't like how it works. West London too posh. East London not posh enough.

South West London for the win, plus it's the most bike friendly IMO.

I don't really read the Sun, I meant figuratively.

cyclingprop

DonDaddyD wrote:

As it stands trips to Essex are becoming increasingly more difficult.
.

Yet another case of big business and Government conspiring to save you from yourself.

bails87

DonDaddyD wrote:

bails87 wrote:

DonDaddyD wrote:

I don't believe in moving for the purposes of work - i.e. moving closer to work.

So when we do move, hopefully, it will be further out of London but in the same South West area. The end result will mean that I will be further away buy bike but marginally closer by car.

If you didn't live in the South West then maybe your commute to the London area wouldn't be so bad
Also, you read the Sun? I'm not angry, I'm just disappointed.....

I'm not moving from South West London....

Whoosh........

notsoblue

Greg66 wrote:

But you also said

notsoblue wrote:

Driving is a luxury in London.

Which suggests that you think having children in London is a luxury.

Yeah, I think it is really. I mean, if you consider how much it costs to own or rent a decent home near a good school in London. If you're on the national average income I'd think you'd really struggle to do this. Maybe my perception is wrong though?

Greg66 wrote:

Anyhoo. I really don't subscribe to the argument: "if you can afford it, you shouldn't complain about it". It suggests that the general population are properly regarded as cash cows to be milked by taxation until they are dry; or to mis-quote a former Lab Chancellor that would be "to squeeze everyone until the pips squeak"

I guess in this specific case the argument is "if you can afford it, you shouldn't complain about it if "it" is undervalued in this country compared to others". The general point though is that it seems to be particularly people who have comfortable incomes that complain the most about taxation, even when it really isn't that much in the grand scheme of things. imo. I appreciate you probably don't feel the same, and thats cool.

notsoblue

jedster wrote:

I'm afraid I have a professional interest in this subject.

I'd make a few points

Thanks for posting Jedster, that was very interesting.

notsoblue

DonDaddyD wrote:

iPete wrote:

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Actually they do as they form up the majority of the electorate for all parties. You'll find legislation, policy, tax and benefits is designed/redesigned to suit the needs, wants and meet the expecation of the voting public - I.e. the lay-man

And this is why democracy is an imperfect system (but the best we've got)!

greg66_tri_v2.0

notsoblue wrote:

Greg66 wrote:

But you also said

notsoblue wrote:

Driving is a luxury in London.

Which suggests that you think having children in London is a luxury.

Yeah, I think it is really. I mean, if you consider how much it costs to own or rent a decent home near a good school in London. If you're on the national average income I'd think you'd really struggle to do this. Maybe my perception is wrong though?

I'm not that inclined to disagree, TBH. I often say that it is more a case of buying children than having them. They are fecking greedy little cash singularities. "Luxury" may be a bit strong, but they are certainly a serious financial commitment that should be thought about.

And that is on top of the warping of price vs value that is endemic to London.

graeme_s-2

Broadly speaking we decide where we live and work. When we decide where we live and work we do so in the full knowledge that getting from A to B costs money and it's a cost that's only ever likely to increase. DDD says he would prefer not to have to move for work. Personally I prefer not to live too far away from work, and always like to live somewhere where I can cycle to work. Saying "I want to have A, B and C and I want the costs of doing so to be less than they are" sounds a bit childish to me. I'd quite like it if Concorde was still around, and was cheap enough for me to work in the UK in the week and live in New York at the weekend. But it's not, and moaning and whinging about it won't change anything.

Petrol costs what it costs, you live where you live and you work where you work. You can change 2 out of 3 of those variables, so moaning about the only one that isn't going to change seems particularly pointless.

DonDaddyD

notsoblue wrote:

DonDaddyD wrote:

iPete wrote:

Thankfully the lay person doesn't get what they want, post on a car forum if you want sympathy

Actually they do as they form up the majority of the electorate for all parties. You'll find legislation, policy, tax and benefits is designed/redesigned to suit the needs, wants and meet the expecation of the voting public - I.e. the lay-man

And this is why democracy is an imperfect system (but the best we've got)!

What do the Dutch do?

notsoblue

Graeme_S wrote:

Broadly speaking we decide where we live and work. When we decide where we live and work we do so in the full knowledge that getting from A to B costs money and it's a cost that's only ever likely to increase. DDD says he would prefer not to have to move for work. Personally I prefer not to live too far away from work, and always like to live somewhere where I can cycle to work. Saying "I want to have A, B and C and I want the costs of doing so to be less than they are" sounds a bit childish to me. I'd quite like it if Concorde was still around, and was cheap enough for me to work in the UK in the week and live in New York at the weekend. But it's not, and moaning and whinging about it won't change anything.

Petrol costs what it costs, you live where you live and you work where you work. You can change 2 out of 3 of those variables, so moaning about the only one that isn't going to change seems particularly pointless.

+1

bails87

I agree with Graeme the northerner

cyclingprop

DonDaddyD wrote:

What do the Dutch do?

Have a schmoke and a pancake?