Why Aren’t Fuel and Oil Prices Moving Together?

The oil and fuel prices move up and down on a regular basis, you’ve likely got another question on your mind: why aren’t fuel and oil prices moving together? This blog can help you find the answers.

Fuel and Oil Prices

Why aren’t fuel and oil prices moving together?

Over the past few months, Brits have watched the prices of fuel and crude oil fluctuate rise and fall far more than usual. Unless you’ve been using the opportunity to make money trading crude oil CFDs, then you’ve likely wondered why you’re suddenly paying so much more every time you fill your car up. 

Now that the price of oil has started to fall, you’ve likely got another question on your mind: why aren’t fuel prices falling with it? We’ve written this short article to help you find the answers.

What factors are influencing the oil and fuel prices?

It’s natural for prices to fluctuate. Even in the best of times, the oil and fuel prices move up and down on a regular basis. But recent events have an unusually sharp rise in prices across the world.

Firstly, the COVID-19 pandemic triggered a global recession in which oil and fuel prices suffered. After the government put the country into lockdown, fewer people were driving their cars, reducing the demand for fuel. The UK economy was dealt a significant blow, and with manufacturers producing less, the oil used in industrial processes and fuel for the transportation of goods both saw less demand than usual.

Then, demand picked up again as lockdowns lifted and governments around the world invested heavily to rebuild their economies. Not long after, Russia invaded Ukraine in early 2022. The war between the two nations has disrupted trade and production for both. 

Many countries throughout the world rely on the two combatant countries for imports. According to data released by the Office for National Statistics, almost one-quarter of all UK oil imports came from Russia in 2021. The well-justified economic sanctions that western nations have imposed on Russia have further inflamed the problem. 

Why aren’t the prices moving together?

Thankfully, the price of oil has fallen since the peaks we saw earlier in the year. Yet unexpectedly, this fall hasn’t been reflected at the fuel pump.

In its raw state, oil can’t power vehicles. We first need to refine it into fuel, the most common versions being diesel and petrol. This process takes place in oil refineries – and these facilities are part of the problem. 

The UK oil refinery industry has been collapsing in recent years, thanks to increasing environmental concerns and regulations, as well as little investment thanks to worries over future oil demands. The pandemic-induced drop in oil prices seems to have put the nail in the coffin, and western oil refineries are struggling to get back on their feet.

In the meanwhile, most of the oil refineries from which Europe gets its supply are based in Russia. It’s for these reasons that the fuel and oil prices aren’t moving together and refinery margins are causing concern.

What do you think needs to be done to tackle high fuel prices? Share your thoughts with us in the comments section.

The Scientific World

The Scientific World is a Scientific and Technical Information Network that provides readers with informative & educational blogs and articles. Site Admin: Mahtab Alam Quddusi - Blogger, writer and digital publisher.

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