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The price of petroleum fuels has increased
over the past year and particularly towards the end of 1999. However, because the
majority of the prices of petrol and derv is made up of tax - 83% of the price of petrol
at the pump, the increase has not been as noticeable as it has been for kerosene and gas
oil.
How prices are set:
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Fuel importers in the UK buy
their product on open market prices. These prices are set in Rotterdam.
Normally, the wholesale scheduled prices are based on the average market price (again set
in Rotterdam) of the previous month and prices will move to take account of any material
month-on-month change.
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In 1998, the international oil
prices were very low and the prices of kerosene for domestic heating followed as a
consequence. Since then, international prices have risen.
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In
1999, OPEC countries (a
group of countries that produce and export oil, e.g. the Middle East states, Venezuela
etc.) agreed amongst themselves to restrict crude oil production. This reduced both
the stock and the supply of crude to the world market. As a consequence, the price of
crude and refined product rose sharply.
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Other factors that have exacerbated the situation
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American and European stock
levels were reported to be at a low level
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Despite
some quota relaxation, OPEC continue with their
restricted quota policy.
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UN sanctions on Iraq hardened
Iraq's attitude into ceasing sales of crude until sanctions were lifted.
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The decline of the Euro against
the US dollar has made the situation worse for the Eurozone.
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Excise duty on petrol
remains high despite budget changes.
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On road fuels, the customer pays
17.5% VAT on the excise duty as well as the product price! |
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