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Thursday 16 October 2008
Falling Crude Prices Slow to Show up at European Pumps
European motorists are seeing only slowly the benefits of the collapse in prices of crude oil since July, but oil companies deny that they have been taking advantage of the drop to increase profit margins. PDF
Falling Crude Prices Slow to Show up at European Pumps
By Tom Bergin – Reuters 15 October 2008
LONDON: European motorists are seeing only slowly the benefits of the collapse in prices of crude oil since July, but oil companies deny that they have been taking advantage of the drop to increase profit margins.
Gasoline prices in Britain averaged £1.07 a liter, or $7.11 a gallon, Sunday, and diesel cost £1.19 a liter, according to data from Experian Catalist.
These prices are down 10 percent and 11 percent, respectively, from a peak in pump prices July 17.
Gasoline prices in many other European countries, including Italy, Greece and Germany, have fallen less than 10 percent since July, according to data from the British motorists’ group, AA.
The price of crude oil, meanwhile, has fallen about 44 percent from its July 11 peak above $147 a barrel.
“Prices have come down, but we’d like to see them come down faster and by more,” said Adrian Tink, strategist at another British motorists’ group, RAC. “Prices seem to go up far faster than they come down.”
Motorists’ groups acknowledge that with about 70 percent of European fuel prices being made up of taxes, the drop at gasoline stations will be less extreme than that in benchmark crude prices.
But though oil prices were at almost the same level 12 months ago as they are today, gasoline prices in Britain are now 10 percent higher than they were then and the price of diesel is 19 percent higher.
Fuel retailers said the relatively muted drop since July reflected a six- to eight-week delay between crude changes and pump prices.
“We bring our prices into line as soon as we can, but drops in oil prices take a while to work through the system,” said Mark Salt, a spokesman for BP.
Higher costs and weaker currencies are the reason why pump prices are above levels from a year ago, said a spokesman for the Petrol Retailers Association of Britain.
The pound and the euro are both down sharply against the dollar, the currency in which oil is traded, since July and compared with October 2007.
Nonetheless, operators are benefiting from lower oil prices, said Stephen Brooks, an analyst at Wood Mackenzie.
“Margins aren’t looking too bad,” he said. “As oil prices drop, margins tend to be a little higher than one would normally expect.”
Analysts at investment banks said they expected big oil companies to report a recovery in profit margins at the retail level later this month.
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Falling Crude Prices Slow to Show up at European Pumps
By Tom Bergin – Reuters
15 October 2008
LONDON: European motorists are seeing only slowly the benefits of the collapse in prices of crude oil since July, but oil companies deny that they have been taking advantage of the drop to increase profit margins.
Gasoline prices in Britain averaged £1.07 a liter, or $7.11 a gallon, Sunday, and diesel cost £1.19 a liter, according to data from Experian Catalist.
These prices are down 10 percent and 11 percent, respectively, from a peak in pump prices July 17.
Gasoline prices in many other European countries, including Italy, Greece and Germany, have fallen less than 10 percent since July, according to data from the British motorists’ group, AA.
The price of crude oil, meanwhile, has fallen about 44 percent from its July 11 peak above $147 a barrel.
“Prices have come down, but we’d like to see them come down faster and by more,” said Adrian Tink, strategist at another British motorists’ group, RAC. “Prices seem to go up far faster than they come down.”
Motorists’ groups acknowledge that with about 70 percent of European fuel prices being made up of taxes, the drop at gasoline stations will be less extreme than that in benchmark crude prices.
But though oil prices were at almost the same level 12 months ago as they are today, gasoline prices in Britain are now 10 percent higher than they were then and the price of diesel is 19 percent higher.
Fuel retailers said the relatively muted drop since July reflected a six- to eight-week delay between crude changes and pump prices.
“We bring our prices into line as soon as we can, but drops in oil prices take a while to work through the system,” said Mark Salt, a spokesman for BP.
Higher costs and weaker currencies are the reason why pump prices are above levels from a year ago, said a spokesman for the Petrol Retailers Association of Britain.
The pound and the euro are both down sharply against the dollar, the currency in which oil is traded, since July and compared with October 2007.
Nonetheless, operators are benefiting from lower oil prices, said Stephen Brooks, an analyst at Wood Mackenzie.
“Margins aren’t looking too bad,” he said. “As oil prices drop, margins tend to be a little higher than one would normally expect.”
Analysts at investment banks said they expected big oil companies to report a recovery in profit margins at the retail level later this month.
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