The amazing petrol penny.
29 July 2008, 10:04 AM
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The amazing petrol penny.
BBC NEWS | Business | Higher oil price boosts BP profit.
On Radio 4 this morning, BP claimed they only make a penny per litre at the forecourt.
This oft used claim got me thinking.
Petrol is, say, £1.15 a litre on average.
50p goes to the government in fuel duty
X amount goes to the Franchisee
Y Amount is the cost to the oil company to get the fuel to the forecourt
1 Pence is oil company profit
Total comes to 98 pence of thereabouts.
Add that all up and then add 17.5% VAT =17.15pence
Total = 1.1515 pence.
So, my question is, what was the deal a year ago, when the price of oil was 50% of what it is now.
Were BP still making just a penny profit?
Were franchisee taking the same amount?
Was the cost of getting the oil out of the ground and to the forecourt the same?
Yes, yes and yes.
It's all smoke and mirrors. Who are BP "Petrol" buying refined product from? BP Refineries.
So the one BP company pays the other, therefore one shows a massive increase in profits, due to the price of oil, and one can keep its profits the same (or even reduce them) because they are paying a higher price for refined product.
Which is exactly what has happened.
Therefore BP can claim to be making just 1 pence at the forecourt, but the reality is that they are making billions.
If the 1p claim were literally true @ £1.15 per litre, they would have been taking a massive hit per litre when it was 80pence. Which , of course, they weren't.
On Radio 4 this morning, BP claimed they only make a penny per litre at the forecourt.
This oft used claim got me thinking.
Petrol is, say, £1.15 a litre on average.
50p goes to the government in fuel duty
X amount goes to the Franchisee
Y Amount is the cost to the oil company to get the fuel to the forecourt
1 Pence is oil company profit
Total comes to 98 pence of thereabouts.
Add that all up and then add 17.5% VAT =17.15pence
Total = 1.1515 pence.
So, my question is, what was the deal a year ago, when the price of oil was 50% of what it is now.
Were BP still making just a penny profit?
Were franchisee taking the same amount?
Was the cost of getting the oil out of the ground and to the forecourt the same?
Yes, yes and yes.
It's all smoke and mirrors. Who are BP "Petrol" buying refined product from? BP Refineries.
So the one BP company pays the other, therefore one shows a massive increase in profits, due to the price of oil, and one can keep its profits the same (or even reduce them) because they are paying a higher price for refined product.
Which is exactly what has happened.
Therefore BP can claim to be making just 1 pence at the forecourt, but the reality is that they are making billions.
If the 1p claim were literally true @ £1.15 per litre, they would have been taking a massive hit per litre when it was 80pence. Which , of course, they weren't.
29 July 2008, 01:23 PM
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I think they are being truthful in terms of the books will show that a forecourt earn a penny a litre for BP.
However, when BP franchise forecourts are buying the petrol from BP refineries it is in effect keeping the prfits at the refinery end.
In other words, if the refineries sold to the forecourts at a stable price (i.e. the cost of getting a litre of oil out of the ground and refined) and the price of oil was added "at the pump" it would be the forecourt business that would be showing a massive profit.
Its still BP earning a hugely increased amount.
I mean when you have BP saying that "we only earn a penny a litre at the forecourt" when the price is £1.20 a litre, and saying the exact same thing when the price is 80 pence a litre, and Fuel duty has remained broadly the same*, then you know some financial massage is taking place somewhere to make it look like that the poor petrol companies are operating at the absolute limit to supply petrol and we should all be eternaly grateful.
*I.e. fuel duty was 50p last year. It is 50p this year - Where is the extra 40p per litre going? Because it isn't going to the government, and it isn't going to the franchisee.
However, when BP franchise forecourts are buying the petrol from BP refineries it is in effect keeping the prfits at the refinery end.
In other words, if the refineries sold to the forecourts at a stable price (i.e. the cost of getting a litre of oil out of the ground and refined) and the price of oil was added "at the pump" it would be the forecourt business that would be showing a massive profit.
Its still BP earning a hugely increased amount.
I mean when you have BP saying that "we only earn a penny a litre at the forecourt" when the price is £1.20 a litre, and saying the exact same thing when the price is 80 pence a litre, and Fuel duty has remained broadly the same*, then you know some financial massage is taking place somewhere to make it look like that the poor petrol companies are operating at the absolute limit to supply petrol and we should all be eternaly grateful.
*I.e. fuel duty was 50p last year. It is 50p this year - Where is the extra 40p per litre going? Because it isn't going to the government, and it isn't going to the franchisee.
29 July 2008, 01:28 PM
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Whichever marketing man dreamed up the "penny per litre at the forecourt" sham must have been paid a huge bonus that year. Yes that might be true, but when you own the entire process from exploration, driling, refining and retailing, you can spin it any way you want as you've already made your huge profit along the way.
29 July 2008, 01:31 PM
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Whichever marketing man dreamed up the "penny per litre at the forecourt" sham must have been paid a huge bonus that year. Yes that might be true, but when you own the entire process from exploration, driling, refining and retailing, you can spin it any way you want as you've already made your huge profit along the way.
29 July 2008, 01:32 PM
#7
I think we should have a whip round for them, the poor hard done by oil companies.
They need the retail outlet as mail order petrol isnt really practical, they subsidise the forecourts and employ people to run it, thats who doesnt make much.
They need the retail outlet as mail order petrol isnt really practical, they subsidise the forecourts and employ people to run it, thats who doesnt make much.
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29 July 2008, 01:32 PM
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29 July 2008, 01:34 PM
#9
Whichever marketing man dreamed up the "penny per litre at the forecourt" sham must have been paid a huge bonus that year. Yes that might be true, but when you own the entire process from exploration, driling, refining and retailing, you can spin it any way you want as you've already made your huge profit along the way.
29 July 2008, 01:35 PM
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29 July 2008, 01:37 PM
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However, I can absolutely guarantee you the reason they did that was because it made economic sense - I bet they have the buyer locked into a long term supply agreement for BP.
In fact a quick google confirms it.
BP Global - Press - BP to Sell Coryton Refinery in Essex
In particular we will require the buyer to provide a long term supply agreement and continuing use of the adjacent distribution terminal. This will also allow us to support and further develop our bio and differentiated fuels strategies in the UK
29 July 2008, 01:38 PM
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I know exploration etc costs a lot but they give the same excuse everytime when asked about their biliions and billions of profit
"But we need to dig some more holes so we are awful skint really in fact we are applying to go on benefits such is our predicament.You don't realise how bad it is for us "
Bring on the windfall tax for these companies and the gas and electric fibbers too
"But we need to dig some more holes so we are awful skint really in fact we are applying to go on benefits such is our predicament.You don't realise how bad it is for us "
Bring on the windfall tax for these companies and the gas and electric fibbers too
29 July 2008, 01:38 PM
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29 July 2008, 01:41 PM
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Again.
If anyone is willign to step up and convince me that BP only make a penny a litre at the pumps, then please explain to me, how, when the price is £1.20 a litre they say it, and saying the exact same thing when the price is 80 pence a litre, and Fuel duty has remained broadly the same
There is, in effect, 35p dissapearing down a black hole. Or "into BP's pockets" as its otherwise known.
If anyone is willign to step up and convince me that BP only make a penny a litre at the pumps, then please explain to me, how, when the price is £1.20 a litre they say it, and saying the exact same thing when the price is 80 pence a litre, and Fuel duty has remained broadly the same
There is, in effect, 35p dissapearing down a black hole. Or "into BP's pockets" as its otherwise known.
29 July 2008, 01:51 PM
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That was Shell.
If that amounts to covering 35pence for every litre of petrol sold in this country I'll eat my left bollock.
I mean it's not as if they are going to fuel thier own fleet at the local service station is it.
I am sure delivery costs have risen, but I reckon that is more than offset by the fact that everyone else in the world is paying more for fuel as well.
I mean it's not as if they are going to fuel thier own fleet at the local service station is it.
I am sure delivery costs have risen, but I reckon that is more than offset by the fact that everyone else in the world is paying more for fuel as well.
29 July 2008, 01:56 PM
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Pete it's simple book-cooking. Tell the world you're living on baked beans on toast and making only one pence per litre at the forecourt, whilst quietly increasing your margins in other areas of the business. Sorted. It's a PR stunt end of story.
29 July 2008, 02:38 PM
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They make £37 million a day and their profits are up 23% year on year.
A penny a litre? LOL!
Newsflash: They are lying!
It's what you get when a cartel is in place!
A penny a litre? LOL!
Newsflash: They are lying!
It's what you get when a cartel is in place!
29 July 2008, 02:46 PM
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BBC NEWS | Business | Higher oil price boosts BP profit.
On Radio 4 this morning, BP claimed they only make a penny per litre at the forecourt.
This oft used claim got me thinking.
Petrol is, say, £1.15 a litre on average.
50p goes to the government in fuel duty
X amount goes to the Franchisee
Y Amount is the cost to the oil company to get the fuel to the forecourt
1 Pence is oil company profit
Total comes to 98 pence of thereabouts.
Add that all up and then add 17.5% VAT =17.15pence
Total = 1.1515 pence.
So, my question is, what was the deal a year ago, when the price of oil was 50% of what it is now.
Were BP still making just a penny profit?
Were franchisee taking the same amount?
Was the cost of getting the oil out of the ground and to the forecourt the same?
Yes, yes and yes.
It's all smoke and mirrors. Who are BP "Petrol" buying refined product from? BP Refineries.
So the one BP company pays the other, therefore one shows a massive increase in profits, due to the price of oil, and one can keep its profits the same (or even reduce them) because they are paying a higher price for refined product.
Which is exactly what has happened.
Therefore BP can claim to be making just 1 pence at the forecourt, but the reality is that they are making billions.
If the 1p claim were literally true @ £1.15 per litre, they would have been taking a massive hit per litre when it was 80pence. Which , of course, they weren't.
On Radio 4 this morning, BP claimed they only make a penny per litre at the forecourt.
This oft used claim got me thinking.
Petrol is, say, £1.15 a litre on average.
50p goes to the government in fuel duty
X amount goes to the Franchisee
Y Amount is the cost to the oil company to get the fuel to the forecourt
1 Pence is oil company profit
Total comes to 98 pence of thereabouts.
Add that all up and then add 17.5% VAT =17.15pence
Total = 1.1515 pence.
So, my question is, what was the deal a year ago, when the price of oil was 50% of what it is now.
Were BP still making just a penny profit?
Were franchisee taking the same amount?
Was the cost of getting the oil out of the ground and to the forecourt the same?
Yes, yes and yes.
It's all smoke and mirrors. Who are BP "Petrol" buying refined product from? BP Refineries.
So the one BP company pays the other, therefore one shows a massive increase in profits, due to the price of oil, and one can keep its profits the same (or even reduce them) because they are paying a higher price for refined product.
Which is exactly what has happened.
Therefore BP can claim to be making just 1 pence at the forecourt, but the reality is that they are making billions.
If the 1p claim were literally true @ £1.15 per litre, they would have been taking a massive hit per litre when it was 80pence. Which , of course, they weren't.
29 July 2008, 03:18 PM
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TAX THE RICH - TAKE THEIR MONEY! SPEND IT ON WELFARE! NATIONALISE IT! RUN IT LIKE BRITISH LEYLAND, PROP IT UP WITH TAXPAYERS MONEY LIKE ROVER! UP THE UNIONS!
Last edited by warrenm2; 29 July 2008 at 03:20 PM.
29 July 2008, 03:24 PM
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Ah, good point. I thought it was the man in the street being affected by the price of fuel and gas and electricity.
Turns out, that even questioning that people are struggling to pay for luxuries like petrol and heating thier homes and ****, whilst companies supplying said services are recording record profits, and basically lying about where the profit is coming from is left wing lunacy.
Turns out, that even questioning that people are struggling to pay for luxuries like petrol and heating thier homes and ****, whilst companies supplying said services are recording record profits, and basically lying about where the profit is coming from is left wing lunacy.
29 July 2008, 03:28 PM
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Whichever marketing man dreamed up the "penny per litre at the forecourt" sham must have been paid a huge bonus that year. Yes that might be true, but when you own the entire process from exploration, driling, refining and retailing, you can spin it any way you want as you've already made your huge profit along the way.
29 July 2008, 04:01 PM
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29 July 2008, 04:04 PM
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29 July 2008, 04:57 PM
#29
Sorry Tel
I was going to correct the spelling in the quote but I remember a whole thread sometime ago about the annoyance of people correcting the spelling in quotes.....so I left it as it was!
29 July 2008, 08:14 PM
#30
Seriously, the working man is being shafted, the current situation isn't really comparable to the seventies/early eighties, Maggie made sure that wouldn't happen again.
I am no economics expert but when one set of companies has everyone else by the ***** there is something wrong, it will stifle growth in other areas and cause ripples throughout the world economy because so much money is sat in oil company bank accounts.
Perhaps the water companies might start the same kind of game ?
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