This would wipe out the effect of the temporary two pence cut in duty on unleaded petrol announced in the Budget. Wholesale petrol prices have increased to a nine-month high. The US has already had to lift petrol imports from Europe recently, partly because environmental regulations have resulted in lower output from US refineries. The explosion on Monday at a Conoco refinery near Grimsby in the UK will not have helped to calm markets. The refinery normally exports more than half of its output to the US and is now likely to be out of action for several weeks.
Crude oil is only one factor influencing the retail price of petrol.
Last year, Esso claimed that a retailer makes only about 5p for each litre of unleaded sold for 84p, with 61p going straight to the government in taxes. The retailer's 5p has to cover other expenses including transportation, storage and processing as well as credit card charges, which alone work out at more than 1p a litre, according to Esso. Shell claims the need not to have made a profit selling petrol in the UK for three years. Changes in wholesale petrol prices often take some time to feed through to retail prices. There is an element of caution involved in this - retailers like to be sure any wholesale price changes are trends rather than blips.