Pumping up house prices

[james armstrong]

Hello,there are a couple of typos in the original.here are the corrected oil prices in $ not cents.
With  apologies to BE N GOLDACRE 

 

Petrol prices ? You do the maths!  I think there is
a rip off, We are being told whoppers and market manipulation commonly called 'monopoly' is the order of the day..

 

A recent spokesperson on 
BBC Radio Four commenting on the record U.K.high petrol prices
(currently, ‘Regular’ in our local Shell service station is at  119p per litre)  and speaking on behalf of  some petrol retailers association (Why have
such a mob? What would you expect him to say?)

“The record prices are 
due to a combination of  fewer
independent service stations, the fall in value of sterling and increasing
price of a barrel of oil” He added another factor- the recent increase in tax
on petrol.

 

THE  QUOTED FACTORS 

The service station shave been closed by the  petrol wholesalers (the same big plc’s) who
have their own  service stations and
presumably give themselves lower rates 
and bigger margins for petrol purchases and sales. So closing
independents isn’t an independent factor in the price hike and  that excuse doesn’t fuel my motor. 

 

The fall in sterling is mostly against the euro- In 2008 one
euro was worth  68p and now around 90p-
but this does not  critically affect
petrol prices- since oil prices are set in  US dollars and presumably bought in US dollars
by U.K.
refineries  who  pay dollars at virtually the same exchange
rate now as in 2008 . The  value of a
dollar has risen and fallen over the last couple of years relative to sterling
but by some 1p or 2p  in the pound , so
this does not account for the  record surge
in petrol price in UK.

 

 The third factor is
the increase in the price of a barrel of oil – increase since when?

In June 2008 the price of a barrel reached some $140 – I
know because I forecast it would fall by  September 2008 to $90 and it did and  I won a bottle of whiskey on the strength of
that. It continued to fall to  below $90 in the following months. 

To-day in 2010 the price is 
some  $80 a barrel. Relative
to June 2008 it is cheaper!  

 

At sometime in 2008 , truckers in UK
struck when the ‘Regular’ petrol  and
diesel price (virtually the same ) threatened to rise above  £1 per litre. To-day with the vastly lower oil
price the petrol price is vastly higher at £1.19 per litre  (for ‘Regular’ in my local Shell station.)   Where is the relation? Apparently little and
not positive and not  direct

Certainly it is not the 
quoted world price for crude that determines the petrol price at the
pump.

 

The  increase in
petrol `tax  this month  (what is it 1p or 2 p per litre?)is a factor
but a small part of  the price hike from
say £1 to £1.18p  .

 

You can refine the argument and better define the figures by
 adding in a factor for  the  number of 
litres of petrol refined from  one
barrel of crude oil. Is there some technical change in the refined output of
petrol? You could also easily get lost in the output of the refineries in UK
against the demand for petrol in UK .`  Is there a shortage of refining capacity?   You could also complicate the  effects on the petrol prices if the  overall output of other  products of the refinement process have varied
so as to reduce (Or increase) the  overall   £ yield
of petrol from a   barrel of crude, so affecting the value of the
 petrol element.

 

   You know what? I
think this is another case of monopolist 
suppliers fixing prices and covering their tracks not  very 
convincingly. For goodness sake there are only a handful of refineries
in the UK
supplying  20million vehicles!  What is really scary is that  petrol prices are so vital to the economy
and  people’s `livelihoods.  That the 
(non) market is in the hands of sharks. That  the transparently weak justification  they give demonstrates their contempt for the
public’s intelligence, I have heard no regulatory authority holding them to
account , and no one to date has shot them down in flames (and sprinkled them
with overpriced petrol.)  

   I’m not  an oil or 
petrol analyst so I don’t ‘know’ but I do know about house prices where
a curiously  similar scenario applies.

 A few giant
corporations  hold a monopoly of supply (Plc’s
holding giant landbanks  in this case) . They  close down the independents (self builders
shut out when they  can’t get land.) They
form a trade association, the House builders Federation , and put up spokesmen
who shift the blame (to slow planners and ‘we live on a small island’ which  ‘we are in danger of concreting over’ ) The
regulatory authority (Competition 
Commission) ignores the official finding of the Government commissioned
report (The Barker Report shows the seven (now six) big boys have a monopoly of
land and in the supply of houses )  The
only difference to date is that there is also a shortage of new houses and not  yet a shortage of petrol- You just wait!   James A.   		 	   		  
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