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Why haven’t petrol prices gone back down yet? A new business model might explain why

Petrol prices might not drop back to previous levels as stations look to recoup increasing business costs.

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Petrol prices reflect lots of elements not just crude oil wholesale cost. Tomas K/Shutterstock

Across the UK the cost of filling up cars shot up in November when wholesale oil prices rose. But when crude oil prices went down again, costs at the pump did not drop back to previous levels. This has prompted UK motoring organisation, the RAC, to complain that drivers are being overcharged. So, what is going on?

Traditionally UK petrol prices have a strong relationship to the price of oil, but there has always been an asymmetry in how price changes are applied. While a rise in crude prices is passed on to the consumer within a month, cost reductions usually take somewhat longer to feed through to pump prices.

Although the average pump price has slowly inched down since late November, the decrease has not been as large as expected based upon the wholesale price. So, on this basis, it would appear that petrol station owners are taking advantage of the consumer. But is that the whole story?

How is the petrol price calculated?

The price that is paid for petrol at the pump is made of a number of factors. The largest portion is fuel duty (which is set at 57.95 pence a litre), this is followed by the cost of petrol itself, which includes the cost of the raw element (crude oil) and its refinement. Tax in the form of VAT (20%) is applied to petrol purchases. These are all built in to the cost of petrol by the retailer. Profit has been traditionally about 5% of the total price. Finally, the cost of delivery and distribution accounts for just under 2% of the total cost.


Read more: How rising wholesale electricity prices will affect the switch to electric vehicles


If the cost of the petrol was the only factor in determining its price, then pump prices would track the wholesale price, but there is more to the business than that.

What is not included in the cost breakdown for petrol is the cost of running a petrol station, including wages for staff, electricity costs, rates and property costs. All of these have risen recently. The increase in the cost of operating a petrol station has also been exacerbated by a decrease in consumption.

Estimates show motor vehicles travelled about 16% less than pre-pandemic levels. Miles driven went from around 9,200 miles in 2002 to 6,800 miles in 2020.

This is supported by data from the government’s business energy and industrial strategy, which reported that for most of December petrol sales volumes were running at 90% of pre-pandemic levels and – for the week ending January 6 – were at 60%. Irrespective of the exact numbers, it is clear that less miles and therefore less fuel is being consumed.

A person filling their car up at a petrol station.
Prices may stay higher as petrol stations adjust to growing electric vehicle use. Maria Sbytova/Shutterstock

There are other factors. Supplying just petrol to a motorist paying by credit card for example, can mean that the petrol station can also lose money on the transaction due to card charges. As a consequence, the majority of profit at a petrol station is not from the fuel but from the attached shop where the retail operation can generate a decent profit. The overall profitability of a retail petrol station is dependant more on the shop than petrol. So pump prices could stay higher to make up for decreasing income from the shop.

As a consequence, with less foot traffic to the stores connected to petrol stations, but with certain fixed (and possibly increasing) costs such as electricity and wages, petrol retailers may have been forced to adjust pricing to ensure an overall profit.

A future for petrol stations?

So the apparent decoupling of the wholesale and pump prices may signal an end to the pricing peculiarities that evolved in the UK due to price competition – going forward price changes may be more affected by profit margins. Whether this is just a kneejerk reaction or whether it’s going to be the new norm, only time will tell.

Nevertheless, these issues around profitability for petrol stations will be further tested with the ever-increasing percentage of electric vehicles (EVs) on UK roads. After all, if you “fill up” with electricity at home or work why do you need to stop at a small speciality store for supplies. You may just as well stop at a traditional grocery store or a smaller supermarket that will have a wider range of produce.

Those drivers not using EVs over the next few years are going to find changes in the cost of petrol since they will have to shoulder an increasing burden of the current business model for old-style petrol stations.

Andrew Barron receives funding from Welsh Government, WEFO/ERDF, EPSRC, and Innovate UK. Andrew Barron is the Chair of the Network for Energy Technology and Director of MiDAS Green Innovations, Ltd, a environemntal technology consulting company.

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Spread & Containment

A dog has caught monkeypox from one of its owners, highlighting risk of the virus infecting pets and wild animals

The monkeypox virus can easily spread between humans and animals. A veterinary virologist explains how the virus could go from people to wild animals in…

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A dog in Paris has become the first case of a pet contracting monkeypox from its owners. Cavan Images via Getty Images

A dog in Paris has caught monkeypox from one of its owners, both of whom were infected with the virus, according to a scientific paper published on Aug. 10, 2022. This is the first case of a dog contracting the monkeypox virus through direct contact with skin lesions on a human.

I am a veterinary pathologist and virologist who has been working with poxviruses for over 20 years. I study how these viruses evade the immune system and am working on modifying poxviruses to prevent infection as well as treat other diseases, including cancer.

With monkeypox spreading in humans throughout the world, my colleagues and I have begun to worry about the increased risk of monkeypox spreading from humans to animals. If monkeypox spreads to wildlife species in the U.S. and Europe, the virus could become endemic in these places – where it has historically been absent – resulting in more frequent outbreaks. The report of the infected dog shows that there is a decent chance these fears could become a reality.

A microscope image of a bunch blue circles in a brown-colored cell.
The monkeypox virus – the blue circles in this image of an infected cell – is a poxvirus similar to smallpox and cowpox and can easily infect many different species. NIAID/Wikimedia Commons, CC BY

A species-jumping virus

Monkeypox is a poxvirus in the same family as variola – the virus that causes smallpox – and cowpox viruses and likely evolved in animals before jumping to humans. Monkeypox causes painful lesions in both humans and animals and, in rare cases, can be deadly. Researchers have found the monkeypox virus in several species of wild rodents, squirrels and primates in Africa, where the virus is endemic. Monkeypox does not need to mutate or evolve at all to be able to infect many different species. It can easily spread from animals to people and back again.

Though there is a fair bit of research on monkeypox, a lot more work has been done on cowpox, a similar zoonotic poxvirus that is endemic in Europe. Over the years, there have been several reports of cowpox infection spreading from animals to humans in Europe.

From people to animals

Until recently, most monkeypox infections occurred in specific areas of Africa where some wildlife species act as reservoirs for the virus. These outbreaks are usually contained quickly through isolation of infected individuals and vaccinating people around the infected individual. The current situation is very different though.

With nearly 40,000 cases globally as of Aug. 17, 2022 – and more than 12,500 cases in the U.S. alone – monkeypox is now widespread within the human population. The risk of any one person transmitting the virus to an animal – particularly a wild one – is small, but the more people are infected, the greater the chances. It’s a numbers game.

There are a number of ways viruses can transfer from animals to people – called spillover – and from people back to animals – called spillback. Since monkeypox is most easily spread through direct skin-to-skin contact, it is a bit more difficult to transmit between species than COVID-19, but certainly possible.

The case of the dog in Paris provides a clear example of how cuddling or being close to a pet can spread the virus. Previous studies on poxviruses like monkeypox have shown that they can stay active in fecal matter. This means that there is a risk of wild animals, likely rodents, catching it from human waste.

A grey rat.
There are a number of species that host monkeypox in Africa – like this gambian rat. Monkeypox can spread from humans to many other animals, including dogs and likely cats and other species of rodents. Louisvarley/Wikimedia Commons, CC BY-SA

The monkeypox virus is also present in saliva. While more research needs to be done, it is potentially possible that an infected person could discard food that would then be eaten by a rodent.

The chances of any one of these events happening is extremely low. But I and other virologists worry that with more people becoming infected, there is a greater risk that rodents or other animals will come into contact with urine, feces or saliva that is contaminated with the virus.

Finally, there is the risk of people giving monkeypox to a pet, which then passes it on to other animals. One case study in Germany described an outbreak of cowpox that was caused when someone took an infected cat to a veterinary clinic and four other cats were subsequently infected. It is feasible that an infected household pet could spread the virus to wild animals somehow.

How to help

One of the key reasons that the World Health Organization was able to eradicate smallpox is that it only infects people, so there were no animal reservoirs that could re-introduce the virus to human populations.

Monkeypox is zoonotic and already has several animal reservoirs, though these are currently limited to Africa. But if monkeypox escapes into wild animal populations in the U.S., Europe or other locations, there will be always be potential for animals to spread it back to humans. With this in mind, there are a number of things people can do to reduce the risks with regard to animals.

As with any infectious disease, be informed about the signs and symptoms of monkeypox and how it is transmitted. If you suspect you have the virus, contact a doctor and isolate from other people.

As a veterinarian, I strongly encourage anyone with monkeypox to protect your pets. The case in Paris shows that dogs can get infected from contact with their owners, and it is likely that many other species, including cats, are susceptible, too. If you have monkeypox, try to have other people take care of your animals for as long as lesions are present. And if you think your pet has a monkeypox infection, be sure to contact a veterinarian so they can test the lesion and provide care when needed.

Even though monkeypox has been declared a public health emergency, it is unlikely to directly affect most people. Taking precautionary steps can protect you and your pets and will hopefully prevent monkeypox from getting into wildlife in the U.S., too.

Amy Macneill does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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International

A-levels: A grades are up compared to pre-pandemic results

The pandemic has has a serious impact on school pupils – but a record number have applied to university.

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Fewer students are getting their first choice of university than in 2021. Monkey Business Images/Shutterstock

The 2022 A-level results are in, and the number of students receiving A or A* grades has fallen – down by 8.4% on 2021.

For the first time since 2019, A-level results are being decided by formal exams. Students were warned that grades were likely to be lower than in 2020 and 2021, when cancelled exams and teacher assessments in A-levels led to record high results. Nevertheless, the proportion of students receiving A grades is up from pre-pandemic levels in 2019.

A busy end to the admissions round is under way for universities and students, and the next steps for students still living with the impact of the pandemic are becoming clearer.

In 2021, some universities were over subscribed and had to offer significant incentives for students to defer their places. While the number of students in 2022 accepted on a UK university course – 425,830 – is higher than in 2019 and the second highest on record, it is 2% lower than in 2021. Just a few days before the results were out, thousands of students did not yet hold an offer of an university place.

Over the past two years, students studying qualifications, whether BTEC, T-level or A-level, have had to cope with the consequences of the pandemic for a significant proportion of their course. This has included school closures and remote lessons, social isolation, illness and increased levels of mental stress.

Highest number of applications

Nevertheless, 2022 has seen the highest ever numbers of applications to higher education, with 44% of 18 year olds applying. This number includes record numbers of students from areas of the country with historically low participation in higher education. It demonstrates that many young people believe higher education can make a difference to their future opportunities.

For the lucky ones who get the grades to gain a place at their first choice of university, planning for their degree course starts right away. A record number of Scottish students have already been accepted to their first choice of university.

The best advice for those students who don’t receive confirmation that they have been accepted by their first choice university is to ring the university, who will have staff on hand to explore their options.

For students who haven’t got a university place, it is still possible to explore options though clearing – which allows students without offers to find places on university courses that haven’t been fully subscribed. Students in this position should try to keep calm, write down their options and avoid quick decisions.

For those young people who do go to university, there will be challenges. With the cost of living for all rising rapidly, people on a lower income – as many students are – will feel the pinch of higher bills for food or rent.

Support from universities

The pandemic saw a serious and concerning rise in mental health issues affecting young people. Universities need to be ready to give holistic support to students as they transition into university and settle into undergraduate life. This means support for academic transition needs to be delivered in the context of good available support for mental health and wellbeing.

However, Universities UK, an advocacy groups for universities, has recently pointed out the wide range of benefits for those who study for a degree, including the £9,500 more per year on average graduates in England earn compared with non-graduates. It also draws attention to the value of degrees to improve the life chances of young people, to build skills and to contribute to society.

For many young people, getting a degree gives them access to a vocation such as teaching or working as a health professional. For others it is a path to travel and adventure. For many, the university journey is a place where young people find their tribe and begin to understand their identity.

For the class of 22, making it to university might mean life-changing opportunities. Given the challenges and restrictions of the last few years, this has never been more important.

Helena Gillespie receives funding from the European Union.

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Government

Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion

According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical…

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According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical company Global Blood Therapeutics (NASDAQ: GBT) for $5 billion.

Pfizer, too, acquired Global Blood Therapeutics 

Pfizer wants to close a deal soon, but there are still other interested parties, according to the article.

Global Blood Therapeutics, which manufactures Oxbryta, the blood disorder medication, saw its shares jump 44%  on Friday afternoon to a two-year high. As of Thursday’s closing, the company’s market cap was $3.12 billion.

A spokesman for Global Blood stated the company does not “comment on market rumors or speculation,” while Pfizer declined to respond on the matter.

With plenty of cash left over after selling its COVID-19 vaccine, New York-based Pfizer is searching for deals that may generate billions of dollars annual sales by 2030.

Its $11.6 billion acquisition of migraine medication manufacturer Biohaven Pharmaceutical Holding (NASDAQ: BHVN) in May was the most recent in a series of purchases that also included Trillium Therapeutics and Arena Pharmaceuticals in recent years.

Oxbryta received approval last year for sickle cell disease management 

In 2019, the US government approved Global Blood’s Oxbryta to manage sickle cell disease in individuals aged 12 and over. The oral medication was approved in December 2021 to treat the illness in younger children. The drug’s sales increased by almost 50% to $194.7 million in 2021.

After a gloomy start to the calendar year, when a lack of significant purchases and clinical-stage treatment failures lowered investor morale and restricted funding, the biotech dealmaking pace has recently picked up again.

Also, Amgen Inc (NASDAQ: AMGN) also decided to purchase ChemoCentryx Inc on Thursday for $3.7 billion to obtain access to a possible breakthrough medication for inflammatory illnesses. AstraZeneca’s $39 billion acquisition of Alexion Pharmaceuticals in 2020 has put the realm of immune diseases in the limelight. The deal, which was announced before trading opened, will also give the corporation control of at least two investigational immune disorders medicines.

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. While reading this article one must assume that we may be compensated for posting this content on our website.

The post Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion appeared first on Wall Street PR.

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