With Shell declaring that they only make a 2% profit margin on their fuel, how does the cost of petrol get worked out here in the UK and why does it fluctuate?
The cost of our petrol is worked out by a variety of factors. The reason it fluctuates in price is because the cost of wholesale crude oil prices goes up and down and is normally traded in US Dollars which is then converted into the UK Pound. There should normally only be a minimal change in prices – if at any point there is a significant leap in cost of petrol, it most likely has more to do with regional supply and demand of refined products.
The reason it doesn’t fluctuate hugely, is down to the fact that in the UK we have to pay a fuel duty which is set at 57.95 pence per litre by the government. On top of this is then added VAT. (A tax levied on the sale of goods or services by UK businesses.) The current standard rate of VAT is 20%. Our fuel is one of the most expensive in the world, due to the taxes we have to pay on it.