BBC on “The Cost of Petrol and Oil: How it Breaks Down”

The BBC web site published an article today on “The Cost of Petrol and Oil: How it Breaks Down“.

They make the point that the “it’s immediately obvious who the primary beneficiary is: the government” with this graph:

They then focus on the price of oil which is a big part of the petrol cost and show the variation in price from about $30 a bbl in 2000 to about $100 a bbl currently (with the wild fluctuations in 2008 and 2009 where the peak price was about $135 to as low as $50 (estimates from their graph).

From then on it’s a bit speculation of what makes up the mysterious price of oil and what it pays for. They do go in to describe how oil price also includes significant portions of tax that goes to governments.

I was struck by some emotive sentences in the report:

However, even with such high rates of tax, this year oil companies are looking at margins of about 25% of the total cost of oil, which is pretty spectacular by most industries’ standards, although this figure does not include financing costs. UK gas and electricity companies, for example, work to margins of about 9%, according to the regulator Ofgem.

and, their last statement:

But whether it’s speculators, investors, governments or oil companies benefiting from high costs of petrol and oil, one thing is certain – consumers invariably end up losing out.

The concept of “losing out” is puzzling. Everyone wants to and needs to be paid, including all readers of this article. Everything we spend goes to someone’s pocket, which in turns goes to someone’s pocket, which in turn … Isn’t that how the world works?

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