Between April 2014 and April this year, the price of a barrel of Brent crude fell by more than 40 per cent from $108.52 per barrel to $64.46 per barrel. Over the same period, British oil refiners raised their profit margins by more than 40 per cent, from 25 cents a gallon to 35 cents a gallon, according to figures from the Energy Information Administration (EIA).
The Times reports that the sharp rise in profits earned by oil refiners is a key reason why motorists are still paying relatively high prices at the pump, according to the AA.
Average pump prices are 113.49p per litre for petrol, and 111.07p for diesel — far higher than the last time crude prices were at current levels.
Luke Bosdet, head of public affairs at the AA, described it as a rip-off.
The price of a barrel of Brent crude hit $43 per barrel on Monday, its lowest level since January 2009. Back then, the average UK prices were 86.6p per litre for petrol and 98.7p for diesel. Part of the difference can be attributed to tax rises, in particular a 2.5 per cent rise in VAT, but this is still a small portion.
Mr Bosdet said: “We are seeing a storm of protests from motorists saying, ‘Why aren’t pump prices lower?’ It’s the traders and refiners who are making the prices much more volatile.”
He said that motorists were suffering because of recent changes in Britain’s refining industry, including the closure of several plants, which reduced competition, and the exit of big oil companies such as Shell, Chevron and BP.
“Since the credit crunch the ownership of refineries has moved away from traditional oil companies to other players, including traders and private companies,” he said. Britain’s six remaining refineries, at Stanlow, Grangemouth, Fawley, Humber, Lindsey and Pembroke, process 85 per cent of the nation’s petrol and diesel. They are run by companies including Essar, which is owned by India’s billionaire Ruia family, and Ineos, controlled by the petrochemicals tycoon Jim Ratcliffe, who is based in Switzerland.
Only two traditional oil companies, Total and Exxon Mobil, remain active in the British refining industry.
In 2013, the International Energy Agency warned that these changes were encouraging a more aggressive and speculative approach to oil refining, storage and distribution.
Essar, which operates the Stanlow refinery on the Mersey estuary, reported its highest ever profit in June of $70 million for the year to the end of March.
Nunzia Florio of UKPIA, a refining industry association, said that UK refining had “experienced very poor returns in the past decade”, which were much lower than comparable industries.
