Recent fuel increases and feeling ripped off

Mon 20 Dec 2010, 11:03

Tescos and the other suopermarkets buy on the 'spot' Rotterdam oil market on a rollinmg basis, so price rises (and falls!) come through quite quickly. They do little or none forward buying and rely on the spot markets, hence their prices can move quite quickly and sometimes quite often.

The oil companies (BP, Shell etc) do hedge & buy on the forward market and plan ahead, so you'll find that they'll spread the average price further and their prices don't change quite as often.

However, tax is tax & no company hedges against that - so you'll find a price rise in early January when both the VAT & extra fuel tax are applied.

Fri 17 Dec 2010, 20:39

I write this message knowing that I’m becoming annoying with my persistence, but I just don’t understand (as below questions)? Call me thick, I don’t mind! However, I would appreciate some understanding on what dictates the fuel RSP prices. Ok, I can understand that in bad weather it’s hard and maybe more expensive to get fuel from source, but surely these large companies budget and prepare by stocking up in advance, to a certain level, depending on the companies forecasting capabilities! Let’s face it, if there’s no fuel – there’s no sales, so it’s only to their advantage, to stock up in advance.
We’ve all seen the news recently, about up north, when roads are gridlocked by heavy snow, when it becomes impossible to deliver, so thus more expensive, when lorries sit there for hours/days - unable to deliver. The Scottish travel MP resigned admitting - he didn’t do enough, to prepare his roads. So I do understand that the fuel company has to compensate for this. It’s the same story with our other basic essential commodity, and that’s stocking up with food. And, fuel dictates our food costs.
That’s why over the obviously coming bad winter, it’s imperative that our roads are gritted, by our council, otherwise no fuel – no food, deliveries, as 11 months ago, when our shops were bare with fresh food – milk and bread, etc. Thank goodness they are being gritted.
Getting back to the point of this posting - I still don’t understand why Tesco are selling fuel at a loss leader? Why are the barrels of oil so close to record levels in winter, when (once again) we hear about the millions of profit these companies make out of us in spring? It just still seems like profiteering to me, when us common folk suffer.
Am I really the only person that doesn’t understand and still feels ripped off?

Thu 16 Dec 2010, 17:34

Thanks Chris, for explaining and being the bearer of further bad news!

One point though that don’t understand is – if Tesco’s fuel is a loss-leader, why are their prices matching the average national pricing? Are there really more Tesco garages that lower the average?

Looks like I’ll have to spend less money on food, to compensate- with my homemade bread, and live off cucumber or marmite sandwiches till spring, with cabbage and onion soup!

If only I had the energy to bike to work for 2 hours a day! I’d get a horse, like the olden days, but I can’t tie up the horse at work and they’re expensive too, as running electric cars And, it’s a shame that the buses aren’t frequent enough, before anyone makes this suggestion. I can’t afford to loose my job, if they make me late, in the snow, etc.

Hey ho, and away to work we go!

Happy Xmas to all.

Thu 16 Dec 2010, 09:06

Tesco use fuel as a loss-leader - in other words, they deliberatly make a loss per litre that they subsidise with profits they make elsewhere.

Fuel stations are unlikely to be able to match Tesco prices - but risk going out of business if we don't use them. Retailers like Tesco are slowly putting other traders out of business wholesale.

And once there are no other local petrol stations, Tesco hike their prices - already have done where they have driven out competition.

A barrel of oil currently is fairly close to record levels at the moment & will only go on getting dearer....

btw - there's another 1p / litre (or is it 0.79p/litre) tax increase to come in January - in addition to the hike in VAT to 20%, so expect a further 1-2p rise then.

Thu 16 Dec 2010, 00:23

I’d be interested in hearing your thoughts on the blatant profiteering with the major recent fuel increases over the last few days/weeks? I’m gob-smacked on how the fuel prises have just suddenly increased. Don’t tell me that these companies buy their fuel day by day - week by week? I…

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