Petrol Price profit

Discussion in 'General Discussion' started by davidjpowell, Aug 13, 2011.

  1. davidjpowell

    davidjpowell MB Enthusiast

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    'Most independent forecourts make between two and four pence a litre - meaning a full tank only nets the petrol station between £1 and £2 profit.'

    BBC News - High cost of petrol defended as oil price falls

    Petrol companies complain that they make virtually no money retailing Petrol, but rely on the shops to make the money.

    Seems obvious, and there have been investigations which have accepted this (or been drowned by paperwork one wonders).

    So why are they still retailing the profit? Is it because they load the costs on the retail stage, and make, judging by their annual profits a nice earner on the refinery stage.

    Am I wrong to be wondering if its all smoke and mirrors?
     
  2. Igurisu

    Igurisu Active Member

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    No you're not. Remember a companies first responsibility is to its shareholders. However much the public complain doesn't really matter that much, both the oil companies and the government know that we will continue buying fuel as most of us don't have any choice. Certainly if you live outside major cities public transport is just not a viable option.

    Hence, good profits for the oil companies, more tax added to fuel by our government.
     
  3. Red C220

    Red C220 MB Enthusiast

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    What is the actualy breakdown of a cost of a litre of fuel?

    I don't mean roughly. Is there a site, showing to the penny, how the price of a litreof fuel is made up?
     
  4. Igurisu

    Igurisu Active Member

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  5. oldcro

    oldcro MB Enthusiast

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    The only problem with the price breakdown shown there is that the filling station profit is always quoted as 5p.
     
  6. gIzzE

    gIzzE MB Enthusiast

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    My mate owns a petrol station and he makes money from the stuff they sell in the shop, not the fuel.


    He has to pay for the fuel before the delivery, and he gets a fill up a week and I think he said they were 35k litres each, so £40k worth a week? which brings in about £6k a week?
    So, you can hardly run a petrol station on that.
     
  7. jaymanek

    jaymanek Authorised Forum Sponsor Authorised Forum Sponsor

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    If he is making 15% gross margin on fuel he is doing extemely well. We were making around 5-6p per litre which today equates to around 4% gross, out of which all the overheads come out.
    Its a tough business with cashflow being the main killer.
    If your friend sells 35K litres a week he will most likely need 80-100K cash to cover for rolling stock..

    Shop is the main business with any fuel station... That is the bit that pays the bills, the fuel just brings the customers in... Hence why fuel stations are quickly becoming mini service stations trying to grab margin where possible.
     
  8. OP
    OP
    davidjpowell

    davidjpowell MB Enthusiast

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    But the oil company all say that they make no money from selling Petrol, hence the limited profit to independents.

    I just wonder though if this is a red herring and whether the oil company's are making there money before the actual retail stage.

    If it's as unprofitable as they say each time the gubberment threatens to investigate them, then why are they still making it.
     
  9. markjay

    markjay MB Club Veteran

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    At least three petrol stations in my area closed down over the past 10 years.

    I am not aware of any new one that opened during that period.

    So there must be at least some truth to it?
     
  10. gIzzE

    gIzzE MB Enthusiast

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    I was just guessing figures, the point was the fuel is just a product to help bring people through the shop door, not a money maker.


    And you're right, anyone in retail is being seriously stressed by cash-flow these days.
     

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