Irish Retail Petrol Price Analysis

The purpose of this analysis is an attempt to answer the question regarding how abnormally expensive Irish petrol prices are. This analysis is restricted to 95 Octane unleaded petrol. The attached document contains the detailed results of this analysis. Performing this analysis involves gathering data from multiple sources:

• Price of crude oil – normally priced in USD
• Price of unleaded petrol (called EN 228 in the industry) – normally priced in USD
• USD to EUR exchange rates
• Effective excise and VAT rates
• Average selling price per litre

This information has to be normalised across changes in currency type and dates on which the information is available.

The EN 228 standard is defined by the Committee for European Standardisation – see http://www.cen.eu/. The relevant standard is EN 228:2008 - Automotive fuels - Unleaded petrol - Requirements and test methods and EU Directive 98/70/EC.

Similarly, diesel is defined by standard EN 590 EN 590:2004 Automotive fuels - Diesel - Requirements and test methods and EU Directive 93/38/EEC.

EN228 is priced in USD per tonne. A tonne of petrol is about 1,335 litres. (This can vary because the specific gravity of EN228 can vary from 720-775 Kg/cubic metre. A cubic metre is 1,000 litres so 1 tonne or 1,000 Kg represents from 1,389 to 1,290 litres. I have used a value of 1,335 litres of petrol per tonne.)

Excise duty increase in increments over the analysed interval. The Oct 2008 budget increased duty (before VAT) to €0.5088 per litre. Prior to that it was €0.4427 per litre for about three years. And so on.

The price of petrol consists of the following elements:

1. Buy price of litre of petrol
2. Excise duty
3. National Oil Reserves Agency levy of €0.01 per litre
4. Margin added by from retailer and supplier
5. VAT

according to (1 + 2 + 3 + 4 ) x 5. However, the public buy price of petrol is not necessarily the price at which it is bought by retailers. Many retail petrol companies are part of larger entities that have direct access to the raw material and refining resources. But the calculated buy price is still a valid index against which sell prices can be compared. This is the price you and I would buy bulk refined fuel for resale at. Having stated this, the difference between the actual sell price of a litre of petrol at petrol stations and the derived buy price based on the public price of bulk refined petrol should be roughly constant. This is not the case as shown in the following chart (Click on the chart to see a larger version):

The left-hand scale shows the sell price. The right hand scale shows the buy price.

There have been long intervals when falls in the cost price have not been matched by falls in the price charged. Price increases are however passed on quickly. Price reductions are passed on slowly if at all.

So, the answer to the question “Are Irish motorists being ripped off?” is a fairly certain yes. The answer to the question “Are the Government doing anything to question retail petrol prices and ensure savings are passed to motorists?” is a definite no.