How Much of the Cost of Fuel Comes from Oil?

Across the globe, over 1 billion motor vehicles rely on gasoline to get from A to B. The UK is no exception, with the RAC estimating there are over 30 million cars in Great Britain. In early June British petrol prices surged to a near four-year high, with the average motorist forced to pay 129.37p per litre, the highest figure seen since August 2014.

So what causes petrol prices to fluctuate so dramatically? When broken down, the price of petrol can be divided into three key categories: the wholesale cost of the fuel itself, national fuel duties and VAT.

How crude oil sways petrol prices

Naturally, there is a direct correlation between the market price of crude oil, the main input used to manufacture gasoline, and the consumer price of petrol. Generally, the price of crude oil represents roughly 30% of final petrol station rates. Brent crude is currently trading at around £52 per barrel, while the average price for a litre of petrol is sitting at around £1.27. This means that for each litre of petrol purchased, motorists pay 0.381p towards the market price of oil.

While the market price for crude oil can fluctuate play a key role in influencing prices at the bowser, the second categories remain largely unchanged. Fuel duty for petrol is currently charged at a fixed rate of 57.95 pence per litre, while drivers are also charged a standard rate VAT at 20%. Both are charged regardless of the state of the oil market, though VAT is determined as a percentage which means it can swing higher or lower depending on pump prices.  

RAC warns of "punitive combination"

Looking forward, experts warn that British motorists could be in for another hit. THE RAC predicts that a "punitive combination" of rising crude oil prices, escalating tensions in the Middle East and a weaker pound could all contribute to higher petrol prices. There are also talks of the government lifting the fuel duty freeze that's been in place for the past eight years. While the taxes would raise much-needed fund for the NHS it would leave British motorists vulnerable and trigger a pump price surge.

“When the impact of a sudden, government-invoked hike in fuel costs becomes so knife-edged, a backlash is inevitable,” cautions AA spokesperson Luke Bosdet.

Beyond powering cars, petroleum moonlights as a versatile fuel with a variety of unique applications, including chromatographic and thermal separation techniques as well as ionisation systems. For a closer look at how it's being used to combine a high acquisition rate with high mass resolution and accuracy, don't miss 'The versatility of time-of-flight mass spectrometry for the investigation of petroleum derived matrices – from middle distillates toward vacuum residues.