Election Year or Fear!

[Andy_Faber]

Same goes for heating oil. Filled my 1200 litre tank up about four weeks ago for 60p pl. Today it’s around 1.31 pl and I don’t believe all the oil they’re selling has reached here in the last 18 days. Heating oil customers often buy up to three weeks in advance to get a better deal, i.e. if you want it tomorrow it’s often much more expensive than if you give them a 20 day delivery window, but there are reports of orders being cancelled and customers being told they have to reorder at the new, much higher, price.

There’s bound to be some profiteering going on but in terms of your purchase of heating oil, you aren’t actually paying for your oil, you’re paying for the next delivery of oil your supplier needs to buy, which will have risen in price from their suppliers etc - added to which wholesale suppliers keep the bare minimum stock they can get away with and profit margins are quite thin. My knowledge is of marine fuels (mainly diesel) but I think the same rules apply. Such ‘close to retail’ entities are too small or to unsavvy to hedge, many years ago my old farmer boss used to hedge a bit by keeping a spare bowser full of oil but it got pinched…

[Geoff Parkstone]

Question for the financial wallahs on here.

The petrol we buy today was refined several weeks ago, it was pumped from the wells months ago. It was paid for months ago at a much cheaper going rate. So, why have petrol prices at the pump shot up?

2nd question, when the crude oil price drops again, why will the drop take time to reach the pumps?

How many pages of possible answers for you need. In broad terms pump prices will be influenced by stock levels of refined product and crude product held at gas station, wholesalers, refineries etc. Also may be stocks of crude held in tankers at sea (mainly a Chibese tactic). Futures trading in product and freight rates. Transport and delivery costs will vary (tanker charter rates have been extremely upwardly volatile). Retailer profiteering will alo impact it (to apically 5 or 6% margin in pump price).

But you're right, prices should come down as quickly as they go up, but never do.

[SithHappens]

Question for the financial wallahs on here.

The petrol we buy today was refined several weeks ago, it was pumped from the wells months ago. It was paid for months ago at a much cheaper going rate. So, why have petrol prices at the pump shot up?

2nd question, when the crude oil price drops again, why will the drop take time to reach the pumps?

I think you know the answer

[ramAnag]

There’s bound to be some profiteering going on but in terms of your purchase of heating oil, you aren’t actually paying for your oil, you’re paying for the next delivery of oil your supplier needs to buy, which will have risen in price from their suppliers etc - added to which wholesale suppliers keep the bare minimum stock they can get away with and profit margins are quite thin. My knowledge is of marine fuels (mainly diesel) but I think the same rules apply. Such ‘close to retail’ entities are too small or to unsavvy to hedge, many years ago my old farmer boss used to hedge a bit by keeping a spare bowser full of oil but it got pinched…

Thank you, and I?m aware that I may be failing to understand this properly, but if that?s the case, why is it that, in normal (non war situations) the price of heating oil, as everyone knows, is significantly cheaper in summer, when we all try to top up, than in winter?

[SithHappens]

When im laying back in my hot tub drinking champagne ill be cursing keir ****ing starmer for how much it cost to heat up.

[swaledale]

Thank you, and I?m aware that I may be failing to understand this properly, but if that?s the case, why is it that, in normal (non war situations) the price of heating oil, as everyone knows, is significantly cheaper in summer, when we all try to top up, than in winter?

Thats a simple one, supply and demand and cashflow. So demand is obviously less in summer, which means lower turnover of product and less cashflow for the busness, so drop the price a little to encourage purchase of whatever commodity one is selling and increase cashflow to ensure at the very least fixed costs of the business are met and possibly a lower margin of profit.

In tims of high demand i.e. winter, the price will epend upon 1) cost to suppliers 2) the profit margin the seller wnats of needs to make 3) Whether demand is at a level which enables a higher profit margin to be made

[ramAnag]

Thats a simple one, supply and demand and cashflow. So demand is obviously less in summer, which means lower turnover of product and less cashflow for the busness, so drop the price a little to encourage purchase of whatever commodity one is selling and increase cashflow to ensure at the very least fixed costs of the business are met and possibly a lower margin of profit.

In tims of high demand i.e. winter, the price will epend upon 1) cost to suppliers 2) the profit margin the seller wnats of needs to make 3) Whether demand is at a level which enables a higher profit margin to be made

Yep, I imagined supply and demand would come into it and you know what I think of that - especially taken to its immoral extreme - but it isn’t a complete answer because a) most oil customers anticipate a reduced summer price so the demand exists to fill up at a cheaper and less pressured time and b) Andy suggested I was actually paying for my next supply of oil rather than my most recent one…hence my confusion.

[swaledale]

Yep, I imagined supply and demand would come into it and you know what I think of that - especially taken to its immoral extreme - but it isn’t a complete answer because a) most oil customers anticipate a reduced summer price so the demand exists to fill up at a cheaper and less pressured time and b) Andy suggested I was actually paying for my next supply of oil rather than my most recent one…hence my confusion.

I'm not convinced by AF's answer on you paying for the next supply of oil, what you pay today will be based on what the retailer thinks the market will bear to an extent. The base line will be the price your seller paid for that oil, though it may well not be the actual price of the oil supplied to you at these times given the fluidity of the price at the moment.

Your making the mistake that other people act like you and forgetting that some users won't be in a position to pay for next autumn's oil now, so there is a significant drop in demand, but also of course, once you've filled your tank you won't be buying any more for a while. Now I don't know how long your tank lasts in the winter, but I would think that over 6 months Oct to March you will buy more than one tank full, certainly many customers will. Whereas April to Sept one tank will probably last you?

So demand does significantly drop over the summer, but of course heating oil isn't priced on its own, the overall demand for oil based products decreases in the summer, so generally the price drops. So even if AF is partially correct in that you pay the price based on what the retailer anticipates what the price of his next purchase will be, it will be cheaper over the summer.

[ramAnag]

I'm not convinced by AF's answer on you paying for the next supply of oil, what you pay today will be based on what the retailer thinks the market will bear to an extent. The base line will be the price your seller paid for that oil, though it may well not be the actual price of the oil supplied to you at these times given the fluidity of the price at the moment.

Your making the mistake that other people act like you and forgetting that some users won't be in a position to pay for next autumn's oil now, so there is a significant drop in demand, but also of course, once you've filled your tank you won't be buying any more for a while. Now I don't know how long your tank lasts in the winter, but I would think that over 6 months Oct to March you will buy more than one tank full, certainly many customers will. Whereas April to Sept one tank will probably last you?

So demand does significantly drop over the summer, but of course heating oil isn't priced on its own, the overall demand for oil based products decreases in the summer, so generally the price drops. So even if AF is partially correct in that you pay the price based on what the retailer anticipates what the price of his next purchase will be, it will be cheaper over the summer.

Your assumptions re our oil use are uncannily correct. Not helped by most heating oil traders being reluctant to deliver less than a minimum of 500 litres, but yes approx 1500 litres between 0ct-March and minimal use - though max purchase - during the ‘summer’ months.

Your first paragraph though takes us back to where we began. Heating oil rapidly rose to more than twice its pre-war price following the initial attacks on Iran and I’m deeply suspicious that the oil being sold in early March wasn’t already here having been bought at the much cheaper pre conflict price.

At the moment then, what many in our position will have budgeted for might have totalled around 1k for oil for the year and that figure will currently have doubled to in excess of 2.5k and rising. We can, albeit reluctantly and grumpily, afford it. Many can’t but have no alternative method of providing heat and hot water. Thankfully Spring may be on the horizon.

[Andy_Faber]

Your assumptions re our oil use are uncannily correct. Not helped by most heating oil traders being reluctant to deliver less than a minimum of 500 litres, but yes approx 1500 litres between 0ct-March and minimal use - though max purchase - during the ?summer? months.

Your first paragraph though takes us back to where we began. Heating oil rapidly rose to more than twice its pre-war price following the initial attacks on Iran and I?m deeply suspicious that the oil being sold in early March wasn?t already here having been bought at the much cheaper pre conflict price.

At the moment then, what many in our position will have budgeted for might have totalled around 1k for oil for the year and that figure will currently have doubled to in excess of 2.5k and rising. We can, albeit reluctantly and grumpily, afford it. Many can?t but have no alternative method of providing heat and hot water. Thankfully Spring may be on the horizon.

Is your supply delivered by a massive tanker or a smaller vehicle?