Northern Ireland Petrol and Diesel prices data analysis

Transcription

1 Rsarch and Information Srvic Papr 163/12 04 Octobr 2012 NIAR Aidan Stnntt and Barbara Lov Northrn Irland Ptrol and Disl prics data analysis 1 Background On th 5 Sptmbr 2012, th Offic of Fair Trading (OFT) issud a call for information on th UK ptrol and disl sctor in ordr to shd light on potntial comptition concrns and dcid whthr thy warrant furthr action by th OFT or othrs. Th call for vidnc sks to xamin a numbr of issus in particular: Whthr rductions in crud oil ar rflctd in falling pump prics; Whthr th practics of supr markts and major oil companis ar making it mor difficult for indpndnt rtailrs to compt with thm; Whthr thr is a lack of comptition btwn ful rtailrs in som rmot communitis in th UK ; and, Whthr th concrns idntifid in by othr national comptition authoritis ar rlvant in th UK. Th OFT has st a dadlin of 18 Octobr 2012 for vidnc; th findings of this xrcis ar du for publication in January This papr provids a numbr of statistical analyss which ar intndd to assist th Committ for Entrpris, Trad and Invstmnt in rsponding to th OFT s call for vidnc. Th papr also: Providing rsarch and information srvics to th Northrn Irland Assmbly 1

2 Provids a historic comparison of Northrn Irland ptrol and disl pump prics prics with th rst of th UK; Calculats th ptrol and disl cost of travlling th mdian vhicl milag in Northrn Irland; Examins th rlationship btwn th pric of oil pr barrl and pump pric of ptrol and disl; and Examins th rlationship btwn ful duty with th pric paid by consumrs for ful at th pump. 2 Ky facts about th UK ptrol and disl markts In thir background information, th OFT outlin a numbr of ky facts about th UK ptrol and disl markts, namly: In 2010 approximatly 5% of UK Housholds avrag wkly xpnditur was spnt on road ful. This is basd on pr wk spnt on motor fuls and a total wkly xpnditur of ; Th UK motor ful sctor is stimatd to b worth 32bn; Btwn Jun 2007 and Jun 2013 th pump pric of ptrol ros by 38% from 0.97 pr litr to 1.34; and In th sam tim th pump pric of disl ros by 43% from 0.97 pr litr to Northrn Irland facts and figurs Using th sam paramtrs as th OFT, Northrn Irland has xprincd a proportional incras in ful prics btwn Jun 2007 and Jun 2012 that is similar to th rst of th UK. In this priod th: NI ptrol pump pric incrasd by 39% from pr litr to 1.353; and NI disl pump pric incrasd by 43% from pr litr to It is worth nothing that th rsults of this typ of analysis vary considrabl dpnding on which month is chosn as a comparator. For xampl, a similar analysis, basd on th pump pric during Sptmbr 2007 and Sptmbr 2012 shows that th: NI ptrol pump pric incrasd by 47.6% from pr litr to 1.411; and NI disl pump pric incrasd by 49% from pr litr to Applying th sam dats to th UK Avrag pric again shows a similar pictur: UK ptrol pump pric incrasd by 47.3% from pr litr to 1.402; and UK disl pump pric incrasd by 49% from pr litr to S th AA ful rport archiv 2 Ibid 3 Ibid Providing rsarch and information srvics to th Northrn Irland Assmbly 2

3 Th nxt sctions provid a mor dtaild analysis of ptrol and disl prics ovr th last fiv yars. Th data usd in th subsqunt analysis is sourcd from th AA Ful rport archiv unlss statd othrwis. Th complt AA data sts usd for this analysis ar includd in th annxs. 3.1 Ptrol pump prics Figur 1 plots th Northrn Irland ptrol prics against UK avrag ptrol prics for ach month from January 2007 until Sptmbr Prics ar shown in pnc pr litr (ppl). Th figur shows that Northrn Irland prics hav followd UK prics closly. Northrn Irland prics hav, howvr, bn consistntly abov th UK avrag pric. Across th 69 month priod thr was only on occasion, January 2009, whn Northrn Irland prics wr lowr than th UK avrag. During this month th Northrn Irland pric was 0.2ppl lowr than th UK pric. Th ovrall trnd shown in Figur 1 is upwards. Th pump pric of ptrol pakd in April 2012 whn it rachd 143.9ppl in Northrn Irland and 142.5ppl in th UK as a whol. This was followd by thr months of dclining prics, a small incras in August 2012 and a substantial spik in Sptmbr 2012 (NI hitting 141.1ppl, th UK raching 140.2ppl). Th AA provids monthly pric data for 11 UK rgions. Using this data it has bn possibl to calculat th frquncy at which Northrn Irland is th rgion with th highst rcordd monthly pric. Ovr th 69 months Northrn Irland rcordd th highst pric 33 tims, or 48% of th tim. Howvr, looking at ach yar shows that th frquncy has incrasd ovr th last two-yars: In 2007, Northrn Irland rcordd th highst monthly pric four tims, or 33% of th tim; This fll to thr tims in 2008, or 25% of th tim; In 2009 Northrn Irland rcordd th highst monthly pric six tims, or 50% of th tim; In 2010 this fll back to four tims, or 33% of th tim; In 2011 it incrasd to ight tims, or 75% of th tim; and In th first nin months of 2012 Northrn Irland rcordd th highst monthly pric ight tims, 89% of th tim. This mans that, in th 21 months sinc January 2011, Northrn Irland rcordd th highst monthly ptrol pric 16 tims, 76% of th tim. Providing rsarch and information srvics to th Northrn Irland Assmbly 3

4 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Figur 1: Monthly NI and UK ptrol prics January 2007 to Sptmbr 2012 (ppl) Northrn Irland UK Avrag Sourc: Th AA Figur 2 plots fluctuations in th diffrnc in ppl btwn th UK avrag pric and th pric in Northrn Irland btwn January 2011 and Sptmbr Th pric diffrnc pakd in Jun 2012, whr NI pump prics wr 1.5ppl highr than th UK avrag. In April 2011, whn pump prics in Northrn Irland and th UK as a whol wr at thir highst, th Northrn Irland pric was 1.4ppl highr than th UK avrag. Th lowst diffrnc btwn th two masurs has bn is 0.5ppl; this occurrd on thr occasions during th priod xamind: April 2011, Sptmbr 2011, and August Providing rsarch and information srvics to th Northrn Irland Assmbly 4

5 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 NIAR Figur 2: Diffrnc btwn NI pric and UK avrag ptrol pric (ppl) January 2011 to Sptmbr Diffrnc ppl in NI and UK avrag pric Sourc: Th AA 3.2 Disl pump prics Figur 3 uss AA data to plot th Northrn Irland avrag disl pric against th UK avrag. As is th cas with ptrol prics, th two lins follow ach othr closly. Northrn Irland s disl pric is consistntly abov that of th UK, although it has historically falln blow th UK avrag mor oftn than th ptrol pric has. This occurrd four tims in th priod xamind: May 2008, March 2009, April 2009, and Jun Looking at th frquncy at which Northrn Irland prics ar th highst of all UK rgions th pattrn is diffrnt than it was for ptrol prics: In th 69 months priod btwn January 2007 and Sptmbr 2012 Northrn Irland had th highst disl pric on 35 occasions, 51% of th tim; In 2008 Northrn Irland rcordd th highst pric fiv tims, or 42% of th tim; In 2009 Northrn Irland rcordd th highst pric thr tims, or 25% of th tim; In 2010 Northrn Irland rcordd th highst pric tn tims, or 83% of th tim; This dcrasd slightly in 2011 with Northrn Irland rcording th highst pric nin tims, 75% of th tim; and In th first nin months of 2012 Northrn Irland has rcordd th highst pric twic, quivalnt to 22% of th tim. Providing rsarch and information srvics to th Northrn Irland Assmbly 5

6 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Figur 3: Monthly NI and UK disl prics January 2007 to Sptmbr 2012 (ppl) Northrn Irland UK Avrag Sourc: Th AA Figur 4 plots th fluctuations in th pric diffrnc btwn Northrn Irland and th UK avrag pric of disl btwn January 2011 and Sptmbr In this priod th diffrnc in th two prics has rangd from 0.2ppl to 1.2ppl. Th uppr nd of th rang occurrd in Dcmbr 2011, whil th lowr nd of th rang occurrd May and August Figur 4: Diffrnc btwn NI pric and UK avrag disl pric (ppl) January 2011 to Sptmbr Sourc: Th AA Providing rsarch and information srvics to th Northrn Irland Assmbly 6

7 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Cost pr avrag fill Figur 5 plots th cost of filling an avrag ful tank btwn 2007 and Sptmbr 2012 for both ful typs. Th figur is basd on an avrag ful tank of 50 litrs 4. In both cass th trnd has bn upwards, with paks and troughs corrsponding to th gnral trnds in ful prics. For ptrol, th cost of filling a 50 litr tank has incrasd from in January 2007 to in Sptmbr 2012, an incras of 60%. For disl, th cost has incrasd from in January 2007 to in Sptmbr 2012, an incras of 55%. Basd on th latst prics, it costs 2.45 mor to fill a 50 litr disl tank compard to th sam sizd ptrol tank. Figur 5: Cost to fill an avrag tank (50 litrs) January 2007 to Sptmbr 2012 ( ) Cost to fill a car ( ) Ptrol Cost to fill a car ( ) Disl Sourc: Th AA & Consumr Council for NI 3.4 Ful cost pr avrag milag Figurs 6 and 7 show th cost of ful for th avrag monthly milag. Tabls 2 and 3 show th cost of ful for th avrag annual milag. Th calculations usd hr ar basd on a numbr of assumptions which should b born in mind whn intrprting this data. Th avrag milag is basd on figurs from DRD s travl survy Th figur usd is annual vhicl milag. According to th travl survy th mdian vhicl milag is within th rang 9,000 to 11,999 mils pr yar. For th purposs of this analysis th mid-point of this rang has bn slctd. Thrfor, th analysis is basd on a mils pr yar figur of 10,500. To calculat th monthly figur it is 4 Consumr Council for NI Brif on th Offic of fair trading call for information on th UK ptrol and disl sctor (Sptmbr 2012) 5 Th mor rcnt survy has not bn usd as th dtaild sctions rquird hav not bn publishd. 6 DRD Travl Survy Providing rsarch and information srvics to th Northrn Irland Assmbly 7

8 assumd that th yarly mils ar sprad vnly ovr ach month. Thrfor, th figur of 875 mils pr month has bn usd. Th small, mdium, larg and avrag sizd ngin figurs ar sourcd from DEFRA data. Ths ar outlind in Tabl 1. Tabl 1: Engin siz, mils pr gallon (MPG) and mils pr litr (MPL) for ptrol and disl vhicls 7 Vhicl Typ Engin siz Siz labl MPG MPL <1.4 litrs Small Ptrol litrs Mdium >2.0 litrs Larg Avrag ptrol car Avrag <1.4 litrs Small Disl litrs Mdium >2.0 litrs Larg Avrag disl car Avrag Figur 1 shows that th trnd in ptrol cost for all car typs has bn gnrally Sourc: DEFRA upwards sinc Btwn January 2007 and Sptmbr 2012 th monthly cost of travlling 875 mils has incrasd for ach catgory as follows: For small ptrol cars th cost has incrasd by from to , or 60%; For mdium ptrol cars th cost has incrasd by from to , or 60%; For larg ptrol cars th cost has incrasd by from to , or 60%; and For th avrag sizd ptrol car th cost has incrasd by from to , or 60%. Tabl 2 provids yarly figurs for ach car typ. Th figur for 2012 is basd on nin months of data availabl, i.. January to Sptmbr. It s notabl, howvr, that although 2012 rprsnts an incomplt yar th total figur for ach car siz xcds th 2007 figur. Basd on this tabl, btwn 2007 and 2011 th cost of travlling 10,500 mils pr yar: Incrasd by from 1, to 1,458.54, or 41% for small ptrol cars; Incrasd by from 1, to 1,813.83, or 41% for mdium ptrol cars; Incrasd by from 1, to 2,572.34, or 41% for larg ptrol cars; 7 DEFRA Emission Factors Providing rsarch and information srvics to th Northrn Irland Assmbly 8

9 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Incrasd by from 1, to 1,790.87, or 41% for avragd sizd ptrol cars. Basd on th abov, th ptrol cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 6% of mdian full-tim grossd arnings (basd on a 2007 mdian grossd arnings for full tim mploys of 21,003 8 ) and 7.7% in 2011 (basd on a 2011 mdian grossd arnings for full tim mploys of 23,185 9 ). For th UK avrag, th ptrol cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 5.2% of mdian full-tim grossd arnings (basd on a 2007 mdian grossd arnings for full tim mploys of 24, ) and 6.8% in 2011 (basd on a 2011 mdian grossd arnings for full tim mploys of 26, ) 12. Figur 6: Ptrol cost of on month s travl January 2007 to Sptmbr 2012 by car siz Cost of 1 month's travl Small ( ) Cost of 1 month's travl Mdium( ) Cost of 1 month's travl Larg ( ) Cost of 1 month's travl Avrag ( ) Sourc: AA, DEFRA and DRD 8 DETI Annual Survy of Hours and Earnings 2007 (07 Novmbr 2007) 9 DFP Annual Survy of Hours and Earnings 2011 (23 Novmbr 2011) 10 ONS Annual Survy of Hours and Earnings ONS Annual Survy of Hours and Earnings UK avrag annual ptrol cost of 2007: 1, and 2012: 1, Providing rsarch and information srvics to th Northrn Irland Assmbly 9

10 Tabl 2: Ptrol cost of travling 10,500 mils pr annum by car siz Cost of 1 yar's travl Small ( ) Cost of 1 yar's travl Mdium( ) Cost of 1 yar's travl Larg ( ) Cost of 1 yar's travl Avrag ( ) 2012* Sourc: AA, DEFRA and DRD * Basd on nin months of data Figur 7 and Tabl 3 prsnts th sam information for disl cars. Again th ovrall trnd has bn upwards. Basd on th data usd to crat Figur 7, btwn January 2007 and Sptmbr 2012 th monthly disl cost of travlling 875 mils has incrasd for ach catgory as follows: For small disl cars th cost has incrasd by from to 96.12, or 55%; For mdium disl cars th cost has incrasd by from to , or 55%; For larg disl cars th cost has incrasd by from to , or 55%; and For th avrag sizd disl car th cost has incrasd by from to , or 55%. Basd on Tabl 3, btwn 2007 and 2011 th cost of travlling 10,500 mils pr yar: Incrasd by from to 1,112.71, or 43% for small disl cars; Incrasd by from to 1,385.64, or 43% for mdium disl cars; Incrasd by from 1, to 1,883.04, or 43% for larg disl cars; Incrasd by from 1, to 1,483.61, or 43% for avragd sizd disl cars. Basd on th abov, In Northrn Irland th disl cost of travlling 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 5% of mdian full-tim grossd arnings and 6.4% in 2011 (basd on th sam mdian grossd arnings for full tim mploys as abov). For thos paying th UK avrag th disl cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 4.3% of mdian full-tim grossd arnings and 5.7% in 2011 (basd on th sam mdian grossd arnings for full tim mploys as abov) Basd on a UK avrag disl cost of 1,033 in 2007 and 1,475 in 2011 Providing rsarch and information srvics to th Northrn Irland Assmbly 10

11 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Figur 7: Disl cost of on month s travl, January 2007 to Sptmbr 2012 by car siz Cost of 1 month's travl Small ( ) Cost of 1 month's travl Mdium( ) Cost of 1 month's travl Larg ( ) Cost of 1 month's travl Avrag ( ) Sourc: AA, DEFRA and DRD Tabl 3: Annual disl cost of travling 10,500 mils basd on car siz Cost of 1 yar's travl Small ( ) Cost of 1 yar's travl Mdium( ) Cost of 1 yar's travl Larg ( ) Cost of 1 yar's travl Avrag ( ) Sourc: AA, DEFRA and DRD Figur 8 uss th sam data as abov to compar monthly ptrol cost of travlling 875 mils pr month in Northrn Irland with th UK avrag and with th rgion rcording th lowst ptrol prics (Yorkshir and Humbrsid) during th priod January 2011 to Sptmbr Th figur shows that Northrn Irland was consistntly abov th UK avrag during this priod. Tabl 4 compars th total ptrol cost in 2011 of travlling 10,500 mils pr yar in an avrag sizd car for th sam thr rgions. It also shows th ptrol cost of travlling 875 mils pr month for th first nin months of Th diffrnc in th cost in th UK and Northrn Irland of travlling 10,500 mils in 2011 with an avrag sizd ptrol ngin was Th diffrnc btwn Northrn Irland and chapst rgion (Yorkshir and Humbrsid) was For th first nin months of 2012 th diffrnc btwn Northrn Irland and th UK has bn 10.30, btwn Northrn Irland and Yorkshir and th Humbr th diffrnc has bn Providing rsarch and information srvics to th Northrn Irland Assmbly 11

12 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 NIAR Figur 8: Ptrol cost of on month s travl (avrag ngin) UK, NI, and Yorkshir and Humbrsid January 2011 to Sptmbr 2012 Ptrol UK Avrag Yorks & Humbr NI Sourc: AA, DEFRA and DRD Tabl 4: Ptrol cost of travlling 875 mils pr month for 12 months in 2011 and 9 months in 2012 in NI, UK, and Yorkshir and Humbrsid UK Yorks & Humbr NI Sourc: AA, DEFRA and DRD Figur 9 prsnts similar information, but for disl. As can b sn from th figur th disl cost of travlling 875 mils pr month in Northrn Irland is consistntly abov th UK avrag. Tal 5 rplicats th analysis in Tabl 4 for disl. Th diffrnc in th disl cost in th UK and Northrn Irland of travlling 875 mils pr month in for 12 months 2011 with an avrag sizd disl ngin was Th diffrnc btwn Northrn Irland and chapst rgion (Yorkshir and Humbrsid) was in th sam priod. For th first nin months of 2012 th diffrnc btwn Northrn Irland and th UK has bn 3.53, btwn Northrn Irland and Yorkshir and th Humbr th diffrnc has bn Providing rsarch and information srvics to th Northrn Irland Assmbly 12

13 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 NIAR Figur 9: Disl cost of on month s travl (avrag ngin) UK, NI, and Yorkshir and Humbrsid January 2011 to Sptmbr 2012 Disl UK Yorks & Humbr NI Sourc: AA, DEFRA and DRD Tabl 5: Disl cost of travlling 875 mils pr month for 12 months in 2011 and 9 months in 2012 in NI, UK, and Yorkshir and Humbrsid UK Yorks & Humbr NI Sourc: AA, DEFRA and DRD 3.5 Ptrol, Disl and Oil Prics Figur 10 plots th pr barrl oil pric for ach month btwn January 2007 and August 2012 (Sptmbr 2012 data was not availabl at th tim of writing). Th Figur shows a clar pak in July 2008 whn hit $ pr barrl. Thr hav bn two furthr, albit smallr, paks in th past 21 months. In April 2011 oil hit $ pr barrl and in March 2012 it hit $ pr barrl. Providing rsarch and information srvics to th Northrn Irland Assmbly 13

14 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Figur 10: Oil pr Barrl ($) January 2007 to August Oil Pr Barrl ($) Sourc: Indx Mundi Figurs 11 and 12 plot th pric of oil pr barrl against th Northrn Irland pric of ptrol (Figur 11) and disl (Figur 12) for ach month btwn January 2007 and Sptmbr It is notabl that during th most rcnt paks (April 2011 and March 2012) th pric of both ptrol and disl was much highr than it was during th July 2008 pak, dspit th pric pr barrl bing considrabl highr in July 2008 than ithr April 2011 or March Looking at this in mor dtail: Th pric of oil was 12% lowr in April 2011 and 10% lowr in March 2012 than its July 2008 pak; Th NI pric of ptrol was 13% highr in April 2011(136.3ppl) and 16% highr in March 2012 (139.2ppl) than it was during th pak oil pric of July 2008 (120.1ppl); and Th NI pric of disl was 7% highr in April 2011(142.7ppl) and 9% highr in March 2012 (145.9ppl) than it was during th pak oil pric of July 2008 (133.6ppl). This suggsts that somthing ls othr than oil pric has ld to th highr ptrol and disl prics xprincd during th spring of 2011 and Th xploration of this possibility is byond th scop of this papr but could b a suitabl point of inquiry for th OFT invstigation. 14 Indx Mundi Crud oil prics (accssd 02 Octobr 2012) Providing rsarch and information srvics to th Northrn Irland Assmbly 14

15 Jan-07 May-07 Sp-07 Jan-08 May-08 Sp-08 Jan-09 May-09 Sp-09 Jan-10 May-10 Sp-10 Jan-11 May-11 Sp-11 May-12 Jan-07 May-07 Sp-07 Jan-08 May-08 Sp-08 Jan-09 May-09 Sp-09 Jan-10 May-10 Sp-10 Jan-11 May-11 Sp-11 May-12 NIAR Figur 11: Ptrol pric Vs Oil Pric P t r o l P n c p r L i t r O i l $ P r B a r r l Ptrol NI Oil $/b Sourc Indx Mundi and th AA Figur 12: Disl pric Vs Oil Pric D i s l P n c P r L i t r O i l $ P r B a r r l Disl NI Oil $/b Sourc Indx Mundi and th AA Providing rsarch and information srvics to th Northrn Irland Assmbly 15

16 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Ptrol, Disl and Ful Duty On possibl factor that could form part of th answr to th point raisd at th nd of th prvious sction is th influnc changs in ful duty hav had on th pump pric of ptrol. Figurs 13 and 14 plot th pump pric of ptrol (Figur 13) and disl (Figur 14) for ach month btwn January 2007 and Sptmbr 2012 and th corrsponding ful duty rat (in ppl) for ach month. It is vidnt in both cass that although th lvl of ful duty has incrasd, th proportional contribution th duty has mad to th final pump pric has falln. Tabl 6 provids mor dtail on th rat of ful duty for ach ful typ in th priod xamind. From January 2007 to Sptmbr 2012 th amount of duty payabl on ptrol incrasd by 23% from 57.68ppl to 70.69ppl. Th contribution of duty to th ovrall pric of ptrol has howvr falln from 65.40% to 47.96%. In th sam tim, th amount of duty payabl on disl incrasd by 11.5% from 54.68ppl to 60.97ppl. Th contribution of duty to th ovrall pric of disl has howvr falln from 58.54% to 39.97%. Figur 13: Ptrol pump pric and ful duty (ppl) Duty Rat Unladd (p/l) Sourc HM Trasury and th AA Providing rsarch and information srvics to th Northrn Irland Assmbly 16

17 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Apr-12 Jul-12 NIAR Figur 14: Disl pump pric and ful duty (ppl) Duty Rat Disl (p/l) Sourc HM Trasury and th AA Tabl 6: Changs in th rat of ful duty sinc 2007 Dat of chang Ptrol (ppl) Disl (ppl) Sourc HM Trasury 4 Calculating th cost of th product Figur 1 sourcd from th BBC shows th constitunt lmnts of pump prics as of Novmbr From th figur it is vidnt that taxs (duty and VAT) contribut 62% of ovrall ptrol pric and 59% of disl pump prics (at th tim of publication). Th rmaining pric is basd on a combination of rtailr margin, th cost of rfining and what th figur rfrs to as th cost of oil but could b mor accuratly dscribd as cost of product. According to th UK Ptrolum Industry Association, not only is crud oil tradd on th opn markt, but so too ar th products drivd from it. Thrfor, Providing rsarch and information srvics to th Northrn Irland Assmbly 17

18 undrstanding th intrnationally tradd pric of ptrol and disl should nabl a gratr undrstanding of pump prics. Th cost of th product on th opn markt is basd upon th markt pric of crud oil, th intrnationally tradd pric of ptrol and disl, and th dollar to strling xchang rat. Figurs 16 and 17 plot th historical pric (xcluding duty and VAT) of crud oil, ptrol/disl and pump prics throughout th priod 2007 to 2011, in both figurs thr ar occasions whr th pric of ptrol and disl mov indpndntly of crud pric, although, th diffrnc is mor markd with ptrol prics. 15 Th OFT call for vidnc spcifically rqusts information on th UK ptrol and disl sctor. Howvr, givn th influnc of intrnational trad and othr intrnational factors on th final pump pric paid by customrs in th UK a full undrstanding of th prics paid by consumrs may only b achivd by a lif-cycl analysis of both products from thir xtraction to thir sal on forcourts. Thr is also th qustion of why, if tax lmnts ar th sam across th UK, Northrn Irland has consistntly (spcially rcntly) paid mor at pump than othr rgions of th UK. Th qustions ariss, whr has this xtra cost bn addd. On mthod of answring this would b to improv th transparncy of th non-tax lmnts of pump-prics. Again, this is likly to rquir a lif cycl analysis. Figur 15: Th componnts of pump prics 16 Sourc: BBC Nws 15 Th UK Ptrolum Industry Undrstanding Pump Prics (accssd 04 Octobr 2012) 16 BBC Nws Th Cost of ptrol and oil: How it braks down (11 Novmbr 2011) Providing rsarch and information srvics to th Northrn Irland Assmbly 18

19 Figur 16: Crud, ptrol spot and ptrol pump prics Sourc: UKPIA Figur 17: Crud, disl spot and disl pump prics Sourc: UKPIA 5 Conclusions Th analysis in this papr has shown th following: Sinc January 2007 th avrag monthly ptrol and disl pump pric paid by consumrs in Northrn Irland had bn consistntly abov th UK avrag. Ptrol prics hav only falln blow th UK avrag onc in this priod (January 2009). Disl prics hav falln blow th UK avrag on four occasions (May 2008, March 2009, April 2009, and Jun 2009). Providing rsarch and information srvics to th Northrn Irland Assmbly 19

20 As wll as bing consistntly abov th UK avrag Northrn Irland has oftn xprincd th highst pric of all UK rgions. For ptrol, from 2007, Northrn Irland rcordd th highst pric in 33 months of a possibl 69, 48% of th tim. Howvr, mor rcntly, sinc January 2011 Northrn Irland has rcordd th highst pric in 16 months out of a possibl 21, 76% of th tim. In th first nin months of 2012, Northrn Irland xprincd th highst pric ight tims. For disl, in th 69 months priod btwn January 2007 and Sptmbr 2012 Northrn Irland had th highst disl pric on 35 occasions, 51% of th tim. In 2011 with Northrn Irland rcording th highst pric nin tims, 75% of th tim, and so far in 2012 Northrn Irland has rcordd th highst pric twic, quivalnt to 22% of th tim. Th cost of filling th avrag 50 litr ptrol tank in Northrn Irland has incrasd by 60% sinc January 2007, from to Th cost of filling th avrag 50 litr disl tank has incrasd by 55%, from to Sction 3.4 xamind how th cost of travlling 10,500 mils a yar in Northrn Irland has changd in th last fiv yars and xamind how this compard with th UK avrag and chapst rgion. Basd on this analysis, for Northrn Irland drivrs, th ptrol cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 6% of mdian full-tim grossd arnings and 7.7% in For th UK avrag, th ptrol cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 5.2% of mdian full-tim grossd arnings and 6.8% in Basd on this Northrn Irland ptrol consumrs spnd a gratr proportion of thir arnings on ptrol than th UK avrag. Th sam is th cas for disl. In Northrn Irland th disl cost of travlling 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 5% of mdian full-tim grossd arnings and 6.4% in For thos paying th UK avrag th disl cost of 10,500 mils pr yar in an avrag sizd car in 2007 rprsntd 4.3% of mdian full-tim grossd arnings and 5.7% in Th analysis of oil prics has shown that thr was a clar pak in pric pr barrl in July 2008 whn it hit $ It also shows that thr hav bn two furthr, albit smallr, paks in th past 21 months. In April 2011 oil hit $ pr barrl and in March 2012 it hit $ pr barrl. Tracking this to fluctuations in ptrol and disl pump prics points to a notabl conclusion. During th most rcnt paks (April 2011 and March 2012) th pric of both ptrol and disl was much highr than it was during th July 2008 pak, dspit th pric pr barrl bing considrabl highr in July 2008 than ithr April 2011 or March This suggsts that somthing ls othr than oil pric ld to th highr ptrol and disl prics xprincd during th spring of 2011 and Providing rsarch and information srvics to th Northrn Irland Assmbly 20

21 Tracking th pump prics to ful duty shows that although that lvl of ful duty has incrasd, th proportional contribution th duty has mad to th final pump pric has falln. Examining th constitunt lmnts of pump prics shows that intrnational factors influnc not only th pric of oil (through its trad on intrnational markts) but also of its drivativs (du to similar trad). This suggsts that a focus broadr than th UK Ptrol and Disl Sctor is ndd to fully undrstand th pric paid at th pump within th UK. Finally, dspit tax bing th sam across th UK, Northrn Irland has bn consistntly abov th UK avrag sinc Th qustion rmains what occurs to mak this so. On mthod of answring this would b to insist upon transparncy of th non-tax lmnts of pump-prics. Again, this is likly to rquir a lif cycl analysis. A numbr of lmnts hav not bn addrssd in this papr, du to tim and spac limitations, but may b prtinnt to th OFTs invstigation. Ths ar: Th impact ful prics hav on Northrn Irland s rural community. According to th Consumr Council Northrn Irland has a rural population of 35% compard to th UK avrag of 12%. Should th data b availabl, an analysis which compars prics at a sub-rgional lvl in Northrn Irland may b usful; Th impact of VAT has not bn xamind in this papr but has an important rol in dtrmining pump prics; and, Th impact of ful tourism in bordr rgions of Northrn Irland. Providing rsarch and information srvics to th Northrn Irland Assmbly 21

22 Annx 1: UK Rgional Ptrol Pric January 2007 to Sptmbr 2012 Not: Colouring ranks prics with rd bing th highst and grn th lowst. Th UK Avrag figurs ar not includd in th ranking. Jan-07 Fb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sp-07 Oct-07 Nov-07 Dc-07 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Jan-08 Fb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sp-08 Oct-08 Nov-08 Dc-08 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Providing rsarch and information srvics to th Northrn Irland Assmbly 1

23 Jan-09 Fb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sp-09 Oct-09 Nov-09 Dc-09 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Jan-10 Fb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sp-10 Oct-10 Nov-10 Dc-10 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Providing rsarch and information srvics to th Northrn Irland Assmbly 2

24 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Sourc AA Providing rsarch and information srvics to th Northrn Irland Assmbly 3

25 Annx 2: UK Rgional Disl Pric January 2007 to Sptmbr 2012 Not: Colouring ranks prics with rd bing th highst and grn th lowst. Th UK Avrag figurs ar not includd in th ranking. Jan-07 Fb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sp-07 Oct-07 Nov-07 Dc-07 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Jan-08 Fb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sp-08 Oct-08 Nov-08 Dc-08 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Providing rsarch and information srvics to th Northrn Irland Assmbly 4

26 Jan-09 Fb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sp-09 Oct-09 Nov-09 Dc-09 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Jan-10 Fb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sp-10 Oct-10 Nov-10 Dc-10 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Providing rsarch and information srvics to th Northrn Irland Assmbly 5

27 Jan-11 Fb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sp-11 Oct-11 Nov-11 Dc-11 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Fb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sp-12 Northrn Irland Scotland Wals North North Wst Yorkshir and Humbrsid Wst Midlands East Midlands East Anglia South East South Wst London UK Avrag Providing rsarch and information srvics to th Northrn Irland Assmbly 6