Diesel prices explained -

[peemac]

If you know of any politicians jumping on the fuel bandwagon here's the calculation of pricing as per Platts prices last Friday on the wholesale market. This would have come into Irish storage over the weekend/Monday and out to fuel stations Monday/Tuesday.



Oil $118
Refining $47 (all time high see https://www.tradingview.com/news/re...XM:1-diesel-barge-cracks-climb-toward-50-bbl/ )
divide by 159 litres in a barrel
exchange rate of 1.09

Net cost in euro - 96c per litre
Duty - 43.5c
Carbon tax 11c
NORA - 2c

Running total €1.52.5c

Distributor margin 10c-11c
Retailer margin 10c-11c

Running total €1.74

VAT @ 23% 40c

Giving a pump price of €2.14

Deduct 15c duty and vat on duty (net duty reduction was 12.2c) and you are at €1.99 where the average diesel price should be today.

Its probably the most transparent consumer product for pricing as every part of it can be verified.

Normal refinery margin is $10. So the refineries are "gouging" to the tune of 30c inc vat.

And because this is a money site, an investment in a heavy fuel oil refinery may be a great play

 

[joe sod]

Diesel edges closer to €2 per litre after surge in prices at the pumps

Diesel could reach €2 per litre at filling station in the coming days .

www.independent.ie

I see diesel prices rising alot again, the government tax cuts have almost been entirely wiped out now. According to the article petrol prices will remain relatively stable the problem is with diesel and the divergence between the two will increase alot in the coming months. The shortages are also coming about because electricity generators on the continent are switching from gas back to oil in order to reduce dependancy on russian gas.

There used to be a nice harmony in the fuel markets whereby trucks, tractors and commercial vehicles used diesel fuel while the majority of passenger vehicles used petrol . Now a large proportion of the passenger fleet also use diesel, in many cases SUVs with 2L engines and larger. All of this was promoted by the ridiculous motor tax changes in 2008 which stopped using engine size to decide the tax bracket and encouraged people to buy large diesel guzzling cars rather than smaller petrol ones.

Also the process of refining oil produces a certain proportion of diesel and petrol, you cannot decide to produce more diesel and less petrol, therefore more petrol inevitably gets produced anyway

 

[peemac]

Did some further research.

Refining from black stuff to white diesel fuel uses a lot of natural gas, so the quadrupling of gas prices adds to forecourt fuel prices.

I wouldn't be caught up much on road vehicles, it's a small part of the equation. Power plants, planes, home heating oil are even bigger users of diesel type fuel.

Media rarely understand what they are writing about as if they did they could have checked the figures.

Diesel refining has dropped to about $40 but petrol has risen to $30 and the dollar is at $1.04

So diesel may drop a little next week, but petrol is set to rise.

So it seems that natural gas prices are to blame for almost all our ills!!

 

[joe sod]

Normal refinery margin is $10. So the refineries are "gouging" to the tune of 30c inc vat.

And because this is a money site, an investment in a heavy fuel oil refinery may be a great play

If that was the case that there is so much money in refining why was it so hard to sell the Whitegate refinery a few years ago , the government deemed it of strategic importance to try and find a buyer for it even though it was not government owned.

The fact is that oil refining and anything to do with oil is a very capital intensive activity. The shortages in oil production are a result of underinvestment over the last decade due to low oil prices and also the fact that ECG investment principles deemed oil investments toxic .

 

[peemac]

If that was the case that there is so much money in refining why was it so hard to sell the Whitegate refinery a few years ago , the government deemed it of strategic importance to try and find a buyer for it even though it was not government owned.

The fact is that oil refining and anything to do with oil is a very capital intensive activity. The shortages in oil production are a result of underinvestment over the last decade due to low oil prices and also the fact that ECG investment principles deemed oil investments toxic .

When "margin" is talked about in refining, that is the difference between the oil price and the price of selling the refined product. The "profit margin" was until recently tiny and at some points refineries operated at a loss.

Currently refineries are making exceptionally good profits - but that's just since March.

here's a very recent article that gives very good details
https://www.bloomberg.com/opinion/articles/2022-05-09/crude-hovers-at-110-a-barrel-but-the-refinery-margin-makes-us-pay-a-lot-more

and if you bought Marathon Petroleum or Valero Energy the day after I put up the original post just 2 months ago, you'd be 30% up as their shares are trading at all time highs (no, I did not buy the shares either)