Are British Oil Companies Guilty of Profiteering?
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Thus, British oil firms have been recently accused that they try to get rich by increasing the cost of petrol in spite of the decreasing crude oil prices, The Daily Mail reported. Even if the petrol price dropped to 2004 levels of less than $45 a barrel, UK motorists have to pay about £50 to fill a family car. The oil price has decreased from a record peak of just over $147 per barrel last July, when petrol prices rose well above the £1 a litter mark.
“It is still not clear why, now that oil is 40 per cent lower and the pound is stronger, we are still seeing the price of petrol and diesel going up,” Luke Bosdet of the AA commented upon the matter.
“It is naive to think that prices can go up without drivers asking why and drawing the conclusion that someone is taking them for a ride. We have got people being made redundant and workers may be having to look for jobs further afield,” he added.
The explanation for the price increase doesn't seem very convincing. Energy analysts Platts tried to explain that the wholesale price paid by retailers for petrol has risen by around 40 per cent, while crude oil prices have risen by only 10 per cent since the New Year. The price has increased that much because the demand for petrol has risen elsewhere in the world, especially in the US. But unlike in Britain, in America, the petrol price remained low because they pay less taxes for fuel.
“The retailers sell it as cheap as they can, depending on how much they pay for it. There is a time lag between the oil price and the pump price of six to eight weeks,” a spokesman for the Petrol Retailers' Association reported.
Insisting that its members are not profiteering, the aforementioned association said the high prices at the pumps can also be explained by the unfavorable exchange rate with the dollar.
Economic downturn, unfavorable exchange rates and high taxes seem to be perfect covers for the British oil firms to defend themselves against profiteering charges.
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