NCA Petrol and Diesel Price Investigation

Investigation into
Petrol and Diesel Price Movements
December 2008
Executive Summary
The National Consumer Agency is pleased to submit the following report in response to
the Tanaiste’s request that “the Agency undertake a survey into why pump prices for
petrol and diesel have not fallen in line with the drop in the wholesale price of oil”.
This report has been prepared over a short timeframe, between September and December
2008 by the in-house research function of the National Consumer Agency. In light of the
time and resource restrictions, a decision was taken to limit the dataset for analysis to
crude oil and downstream product prices between January and December 2008. Whilst
analysis over a longer timeframe and using larger datasets may permit greater detail and
facilitate identification of even small variances from trend, the NCA is confident that the
general trends observable over the period under examination presents a fair reflection of
the current state of the Irish consumer petrol and diesel market.
Based on the key findings of the research, the NCA has concluded that:
• There is little evidence to suggest unwarranted delays in the passing on of
wholesale price changes to the consumer at the pump.
• Direct comparison between fluctuations in crude oil prices and petrol and diesel
pump prices is inappropriate and does not reflect the reality of the petrol and diesel
supply chain. To more accurately assess flow through of price changes in refined
oil products (such as petrol and diesel) to the consumer, it is necessary to compare
fluctuations in Platts prices, these being the prices for Refined oil products such
as petrol and diesel paid by wholesalers, and prices at the forecourt pump.
• Platts prices and wholesale prices should differ by a margin comprising the impact
of exchange rates, taxes, transportation and associated costs. The subsequent
difference between wholesale and pump prices is typically dictated by the
purchasing power of the end retailer (discounts accrue based on volumes
purchased, membership of a “branded” chain etc.) and an allowance for the
retailer’s margin.
• Analyses of these fluctuations over the time period of this study suggest a strong
correlation between Platts prices and wholesale price fluctuations and the price of
diesel and petrol at the pump (allowing for changes in the euro/ dollar exchange
rates).
• A large proportion of the pump price of fuel in this country comprises taxes and
duties. The manner of their calculation can depress overall pump cost savings to
consumers, notwithstanding drops in the underlying cost of the refined fuel
product.
• Overall, Ireland’s service station/retail petrol and diesel supply market would
appear to be competitive by international standards. The density of outlets per
capita (1 outlet per 2,020 people) in Ireland compares favourably against
corresponding statistics for Northern Ireland (1 outlet per 3,113 inhabitants) and
for Great Britain (1 outlet per 9,539 inhabitants). Data is required at the local level
to make a definitive statement in this regard.
1
• Examination of the accounts of the larger oil companies in Ireland suggest there is
relatively modest profit to be made in the downstream supply of refined oil
products. Further along the supply chain, statistics measuring the numbers of
service stations and fuel outlets in the country point to sustained shrinkage year on
year, which would further suggest this is not a highly profitable area in which to
operate, at least at the level of fuel supply only. Increasingly, fuel retailers are
adding retail outlets to their offerings, thereby enhancing revenue and margin
opportunities.
• A review of international studies on the same issue in the USA, Austria and
Portugal reached broadly similar conclusions, identifying closely aligned
movements in Platts prices and petrol and diesel pump prices.
• Absolute fuel price competitiveness in Ireland would appear to be most
significantly influenced by the effects of local competition. Areas with larger
numbers of fuel retail outlets typically enjoy strong price competition, with the
converse applying in sparsely serviced areas.
Notwithstanding these conclusions, the National Consumer Agency has identified a range
of gaps in the manner in which information on petrol and diesel prices in Ireland is
collected, analysed and made available. There is clearly scope for enhancement in analysis
and reporting, and improvements in this area could serve to better inform consumers of
general trends in petrol and diesel prices and to place a sustained spotlight on the
competitive environment in this important sector.
2
Table of Contents
1 Introduction.............................................................................................................................. 5
2 The Oil Market in Ireland........................................................................................................... 7
2.1 Refineries......................................................................................................................... 7
2.2 Wholesalers...................................................................................................................... 8
2.3 Distributors....................................................................................................................... 9
2.4 Retailers........................................................................................................................... 9
3 Pricing.................................................................................................................................... 12
3.1 Whitegate Refinery ........................................................................................................ 12
3.1.1 Refined Product Pricing - Month Average Customers............................................13
3.1.2 Refined Product Pricing - Twice Weekly Price Changes.........................................14
3.2 Wholesalers.................................................................................................................... 16
3.3 Oil Distributors /Retailers................................................................................................ 27
3.4 Competitiveness of the Market....................................................................................... 29
3.4.1 Oil Company Performance.................................................................................... 29
3.4.2 Numbers in the Market......................................................................................... 30
4 Collection of Retail Price Data ................................................................................................ 31
4.1 Retail Price Data............................................................................................................. 31
4.1.1 AA Ireland Data Collection.................................................................................... 31
4.1.2 Website Data ...................................................................................................... 32
4.1.3 Central Statistics Office Data Collection............................................................... 33
4.1.4 EU Data Collection............................................................................................... 33
4.2 National Consumer Agency Surveys............................................................................... 35
5 Conclusions............................................................................................................................ 39
Annex 1 Investigations............................................................................................................. 41
Investigations........................................................................................................................... 41
USA 41
Austria................................................................................................................................. 41
Portugal............................................................................................................................... 41
Other Studies ...................................................................................................................... 42
3
Table of Figures
Europe Brent Spot Price January to December 2008..................................................................12
Refinery Versus Crude Oil Prices................................................................................................13
Whitegate Customer Area..........................................................................................................15
Whitegate Refinery Margin........................................................................................................16
Platts Quotes/ ConocoPhillips Wholesale Prices..........................................................................18
Platts Quotes/ Campus Wholesale Prices...................................................................................19
Platts Quotes/ Emo Wholesale Prices.........................................................................................20
Platts Quotes/ Esso Wholesale Prices.........................................................................................21
Platts Quotes/ Maxol Wholesale Prices.......................................................................................22
Platts Quotes/ Morris Wholesale Prices......................................................................................23
Platts Quotes/ Topaz Wholesale Prices.......................................................................................23
Platts Quotes/Texaco Wholesale Prices......................................................................................24
Platts Quotes/ TOP Wholesale Prices..........................................................................................25
Petrol and Diesel Prices ............................................................................................................31
AA Ireland versus Platts.............................................................................................................32
Table of Tables
Table 1Platts Variation Versus ConocoPhillips Wholesale Prices.................................................18
Table 2Platts Variation Versus Campus Wholesale Prices..........................................................19
Table 3Platts Variation Versus Emo Wholesale Prices................................................................20
Table 4Platts Variation Versus Esso Wholesale Prices................................................................21
Table 5Platts Variation Versus Maxol Wholesale Prices..............................................................22
Table 6Platts Variation Versus Morris Wholesale Prices.............................................................23
Table 7Platts Variation Versus Topaz Wholesale Prices..............................................................24
Table 8Platts Variation Versus Texaco Wholesale Prices............................................................24
Table 9Platts Variation Versus TOP Wholesale Prices.................................................................25
Table 10 Petrol and Diesel Price Build-up early December 2008................................................26
Table 11 Petrol and Diesel Prices –Cost of Product and Taxes....................................................26
Table 12 Setting of Price - Summary..........................................................................................28
Table 13 Oil Company Accounts ...............................................................................................29
Table 14 Petrol Prices 7 November 2008...................................................................................36
Table 15 Diesel Prices 7 November 2008...................................................................................37
Table 16 National Results Petrol ...............................................................................................38
Table 17 National Results Diesel ...............................................................................................38
4
1 Introduction
There is a widely held view that when the price of crude oil increases, petrol and diesel
prices at the pump rise quickly, but that when the price of crude oil decreases, prices at the
pump are slower to fall.
In September 2008, the Tánaiste and Minister for Enterprise, Trade and Employment
Mary Coughlan, TD, “requested the National Consumer Agency1 to undertake a survey
into why pump prices for petrol and diesel have not fallen in line with the drop in the
wholesale price of oil.” The Tánaiste went on the say that “I consider it important that
there should be greater transparency between the manner in which the retail price for fuel
paid by consumers follows changes in the wholesale price”.
This document presents the findings of the Agency’s investigation into the movement of
petrol and diesel prices in Ireland. The analysis in this study is based on information
commencing January 2nd 2008 and includes data collected up until the first week of
December 20082.
In compiling this investigation, the Agency has:

♦ Held discussions with oil companies (Texaco, Top, Esso, Maxol, Topaz,
ConocoPhillips), oil distributors (East Cork Oil), retailers (Tesco, Applegreen3,
individual retailers) and other relevant parties (National Oil Reserves Agency, Irish
Petroleum Retailers Association, Competition Authority and Department for
Communications, Energy and Natural Resources),
♦ Conducted extensive surveys of petrol and diesel prices at the pump (over 2,400
prices gathered over 4 Fridays in November),
♦ Analysed wholesale and retail prices in Ireland and compared these with prices for
refined product at international level.
In order to understand how and why prices change it is necessary to understand how the
oil industry operates. As a result, a significant proportion of this report is concerned with
describing the market for petrol and diesel in Ireland. This will improve transparency and
it also provides useful context for the sections of the report that analyse price fluctuations.
This study was conducted within the following parameters:

• Only the market for petrol and diesel4 was examined,
• Within this market, only sales to private consumers were examined5
1
Hereafter referred to as the Agency.
2
This tightly restricted time frame simplified the required analysis, as a longer-term study would require
correcting for changing distribution costs, longer term inflation etc.
3
The Agency would have liked to consult with a number of other oil companies in Ireland but there was
insufficient time.
4
The Agency is happy to examine the market for home heating oil at the request of the Tánaiste. While
wholesale prices are readily available, accurate retail prices would be difficult to obtain as the nature of the
market lends itself to difference prices for different customers, depending on volume, distance to travel,
credit history etc.
5
The market for haulage and fuel cards is excluded as these markets have their own distinct
characteristics.
5
The report is divided into this introduction plus 4 sections and an Appendix as follows:
• Section 2 outlines the context for the study by providing a description of the
market for oil in Ireland.
• Section 3 describes the factors that affect pump prices and compares relevant
trends in international prices with wholesale and retail prices in Ireland.
• Section 4 examines the current situation in Ireland with regard to the collection of
price data and also presents the results of the Agency’s surveys.
• Section 5 presents conclusions, recommendations and outlines a number of areas
where further study may be warranted.
Appendix 1 presents the results of similar price investigations in other countries. Key
points are highlighted in bold throughout the report.
The Agency would like to thank those who provided time and information in the course of
this study.
6
2 The Oil Market in Ireland
In order to provide a context for the analysis of prices, this section gives a brief summary
of the oil sector in Ireland.
In 2007, according to Experian Catalist6, total motor fuel sales in Ireland were just over 3
billion litres. The total market for oil in Ireland is approximately 0.2% of the world
total. The market for the EU as a whole is around 100 times larger 7. Ireland imports
all of its oil requirements either in the form of crude oil or as finished products such as
petrol and diesel. For the most part, the crude oil that is refined in Ireland is sourced from
the North Sea while imports of finished products come from the UK and Europe.
Crude oil is imported into the ConocoPhillips Whitegate refinery, while finished products
are imported into Dublin, Drogheda, New Ross, Marina, Foynes, Limerick, Galway and
via Northern Ireland through Derry and Belfast. These ports are of varying size, which
affects the size of the ships that use them, and in turn the prices that consumers pay further
down the distribution chain. This is explained in more detail hereafter.
The oil industry comprises two distinct segments, upstream and downstream. Upstream
oil companies are concerned with exploring, extracting, producing and transporting crude
oil. Downstream oil companies refine, store, transport, distribute and sell refined products
such as petrol and diesel. Some companies are vertically integrated, i.e. they are involved
in more than one level of the market, and several operate across the entire supply chain,
from extraction to retail sales.
It is important to note that the vertically integrated companies in Ireland operate as

separate entities to the refineries owned by their parent companies. They compete for
refinery output with other companies on a commercial basis. In Ireland, ConocoPhillips,
Esso and Texaco are vertically integrated.
The Competition Authority has identified8 four categories or stages in the motor fuel
industry in Ireland:
♦ Refineries,
♦ Wholesalers,
♦ Distributors,
♦ Retailers.
2.1 Refineries
There is one refinery in Ireland9, based in Whitegate, Co. Cork. The refinery was
constructed in 1959 and ran until it was shut down (due to over capacity in Europe) in
1981. It was restarted soon after by the state owned Irish National Petroleum Corporation
6
Experian Catalist provide daily site retail fuel prices for main fuels on sites across the UK, the Netherlands
and Spain. They also publish market data for Ireland. The displayed prices for each type of fuel are obtained
from fuel card transactions made on the forecourts the day before.
7
Source: International Energy Agency.
8
Competition Authority Submission to OECD Working Party on Competition and Regulation. September
2008.
9
In comparison, the UK has 10 refineries. Denmark, a country with similar demand to Ireland, has 2.
7
and was sold to Tosco in 2001. Phillips subsequently acquired Tosco in 2001, which in
turn merged with Conoco in 2002. There is an agreement with the Irish Government that
the refinery will continue to operate until 2016.
The refinery is small by international standards however it runs permanently10 at

maximum capacity (75,000 barrels a day). There is a large, by Irish standards, import
facility on the site.
The refinery converts crude oil into LPG, gasoline, kerosene, diesel, heating oil and fuel
oil. It supplies approximately one third of the transport market in Ireland and is
responsible for the majority of product in the South of Ireland (see Section 3). It does not
sell directly to private consumers.
In most cases, from each barrel of crude oil, the refinery produces
♦ 20% gasoline,
♦ 10% kerosene,
♦ 20% diesel,
♦ 10% heating oil,
♦ 35% fuel oil,
♦ 5% consumed as fuel.
The proportion of fuel oil is high in comparison with other refineries. This limits
profitability, as fuel oil is less valuable than the other products. Its gross margin, the
difference between the aggregate product price and the crude price, varies daily (see
Section 3).
The refinery sells to over 100 customers (see Section 3)

♦ Wholesalers,
♦ Distributors,
♦ Retailers,
♦ Other e.g. Marine, Spot, Tender.
2.2 Wholesalers
Wholesalers import petroleum products into Ireland, or purchase from the refinery at
Whitegate.
The key players in this segment are:

♦ Campus Oil,
♦ Chevron (trading as Texaco in Ireland),
♦ ExxonMobil (Esso),
♦ Emo
♦ MorrisOil
♦ Maxol,
10
The only scheduled shut down occurs once every 5 years.
8
♦ Topaz,
♦ TOP.
These companies’ import directly and in some cases storage facilities are operated on a
shared basis, such as the Dublin Joint Fuels Terminal, operated by Esso and Texaco.
Topaz operate their own terminals in Dublin, Cork, Limerick, and Galway. TOP operate
their own terminal in Dublin, and have throughput arrangements with others around the
country. Maxol, Emo, Campus and Morris have throughput arrangements with a number
of terminal operators around the country.
2.3 Distributors
These companies obtain product from wholesalers or directly from Whitegate refinery and
sell it to a range of domestic, industrial and commercial customers (including service
stations). There are a large number of companies in this category, many of which are also
wholesalers (Topaz, Maxol etc). Some of the main players in this market are the firms
mentioned in section 3.2 plus Petrogas, Emo, East Cork Oil, Sweeney Oil etc.
Product is either moved by road or by sea because there are no oil pipelines in Ireland, as
there are in the UK for example. This has a significant impact on costs, see section 3.
2.4 Retailers
These companies supply directly to consumers. The discussion here is limited to service
stations and does not address the supply of home heating oil.
There are four main types of service station in Ireland:

1. Those owned and operated directly by oil companies,
2. Those owned directly by oil companies but licensed to station operators
(Licensees),
3. Those owned by independent retailers which are tied to a particular supplier
(by way of a Solus agreement11) and
4. Independent retailers not tied to a supplier (there are very few of these).
Independently owned stations may or may not operate under the brand of an oil company.
In practice, it is impossible for the consumer to distinguish between oil company owned
service stations and independently owned stations operating under the brand of that oil
company. Yet this distinction is important as categories 2, 3, 4 above set their own prices
whereas Head Office will set prices for company owned stations, reflecting savings
achieved through purchasing power based economies of scale. Over 75% of service
stations in Ireland are independently owned.
There are approximately 10 main players in the Retail segment of the market. The largest,
Topaz, operates a network of 350 service stations, some of which it owns and some of
which it operates under Solus agreements. Esso, Maxol and Texaco all operate similar
11
A Solus agreement is one by which a person aggress to buy from, or be supplied by, one supplier. This
type of agreement is common in the fuel retail business.
9
numbers of service stations. Other well-known brands are Campus, Emo, Tesco,
Applegreen, and GreatGas.
Solus agreements operate for a fixed period. Since 2002, they are limited to 5 years (rather
than 10 years as was the case previously), although they can be for a shorter period. In
general, the agreement entails an exclusive purchasing obligation whereby the retailer
purchases product at a wholesale price less a fixed rebate which can by mutual agreement
be reviewed to take account of competition and changing circumstances (see section 3).
In return the oil company may provide money for re-branding and shop refurbishment.
This is not always the case and some retailers wish to remain “unbranded” or elect to pay
for re-branding themselves. The size of rebate achievable by them depends on a number of
factors including the size of any loan from the oil company, location, sales volume/history
etc.
In general, these agreements allow retailers to take advantage of branding and cross-
selling opportunities, benefit from the marketing expertise and buying power of the larger
firm and, importantly, to achieve cost efficiencies in their purchasing. For this reason, very
few stations are not tied to an oil company.
The total number of retail sites in Ireland is disputed, with figures ranging from 1,332 12 to
2,03413. This difference reflects the proportion of fully-fledged “service stations” versus
unbranded outlets that have just one or two pumps. Industry sources suggest that in years
to come a “natural level” for this country will be around 1,000 service stations.
In addition, the total number of stations has been in decline for the last 20 years or so.
Figures from the Irish Petroleum Industry Association (IPIA) show that for its members 14
the total number of sites fell from 2,308 in 1997 to 1,092 in 2007 (a decrease of 52%).
A number of reasons are cited for this decline in the number of stations in Ireland over
time (in random order):
♦ Property development (particularly in Dublin),
♦ Increased safety standards – requirements for significant investment in sites to
comply with the Dangerous Substances Act and
♦ Reduced profitability due to increased competition.
In recent years there has been a move to add convenience stores/delis to the fuel side of
the business. The reason given is that the higher margins achievable through these
activities compensate for the relatively modest return on selling fuel (margins are
discussed in detail in section 3). It should be noted, however, that the size of service
station shops is restricted to 2,000 square feet under the Retail Planning Guidelines, unless
local authorities grant otherwise under special planning conditions.
12
2008.
13
Experian Catalist (2007 figures).
14
Campus, ConocoPhillips, Emo Oil, Esso, Maxol, Chevron, TOP and Topaz.
10
There are no restrictions on the number of service stations in Ireland, the market is fully
liberalised. A set of key criteria must be satisfied, including full planning permission and
the applicant must comply with the Dangerous Substances Act (Retail & Private
Petroleum Stores) S.I. 311 1979, and European Communities (Control of Major Accident
Hazards involving Dangerous Substances) Regulations, 200015.
In terms of the volume of the Irish retail market for petrol and diesel, Experian Catalist
reports the average volume per station in Ireland at 1.498 million litres of motor fuels per
annum. This average is slightly misleading as it includes a number of small and very small
outlets. Independently owned service stations typically sell in the region of 0.5m litres
to 2,5m litres per annum while a decent sized company owned site will have a volume
of around 3m to 4m litres per annum.
The number of stations per capita in Ireland is 1 station (taking the higher figure above)
for every 2,020 inhabitants. This compares with 1 station per 9,539 inhabitants in the UK
and 1 station per 3,113 people in Northern Ireland. These figures are all derived from
Experian Catalist data, so they should be comparable. Taken in isolation, this suggests
that, at a national level at least, the market structure is competitive compared to
Northern Ireland and the UK. It should be noted, however, that fuel markets are local in
nature; therefore data at this level is required in order to make a definitive statement.
In summary, along with independently owned sites and some very small (<10) retail
networks, there are 10 principal participants in the retail market: Esso and Texaco are
vertically integrated to the refinery level, ConocoPhillips operate at the refinery and
wholesale level. The remaining players are all Irish-owned. Topaz, the largest operator, is
integrated to the wholesale level, as are TOP, Campus, Maxol and Emo. The two newer
entrants, GreatGas and Applegreen, are not integrated 16. Tesco sources its fuel from
Topaz.
15
Department of Communications, Energy and Natural Resources.
16
2008.
11
3 Pricing
The price that consumers pay for petrol and diesel in Ireland depends on a number of
factors including the price of crude oil, the price of refined product, taxes, transportation
costs, company margins etc. This section will describe these factors in detail.
Given the importance of the refinery at Whitegate to the overall market, their pricing
structure is examined separately.
3.1 Whitegate Refinery

As mentioned in section 2, Whitegate refinery is the only entity in Ireland that imports
crude oil. It then refines this crude oil into final products such as fuel oil, petrol and diesel.
Crude oil is a commodity and as such its value behaves as any other commodity, with
price swings in times of shortage or oversupply. The crude oil price cycle may extend over
several years responding to changes in demand as well as OPEC and non-OPEC supply
fluctuations.
Demand for crude oil is derived from the demand for the finished and intermediate
products that can be made from it. Commodity traders and speculators also increasingly
affect demand. 3.1 shows the variability in the price of oil over the period from January to
early December 2008. As most of our imported crude oil comes from the North Sea, data
in 3.1 relates to oil from that area, known as Brent Oil.
Figure 1 Europe Brent Spot Price17 January to December 2008

160
Europe Brent Spot Price Dollars per Barrel
140
120
100
80
60
40
20
0
08
09 08
08
08
05 08
08
16 08
08
27 08
08
08
08
08
21 08
08
02 08
08
13 08
08
08
24 08
08
08
08
1/
1/
1/
2/
2/
3/
3/
4/
4/
5/
5/
6/
6/
7/
7/
7/
8/
8/
9/
9/
0/
0/
1/
1/
/0
/0
/0
/0
/0
/0
/0
/0
/0
/0
/0
/0
/0
/0
/1
/1
/1
/1
/0
/0
/0
/0
/0
/0
02
30
12
26
07
04
16
30
10
08
22
19
13
23
18
27
Source: Energy Information Administration
17
Spot price is defined as the present delivery price of a commodity being traded on the spot market. Also
called cash price.
12
The average price over the period was $102 per barrel, however the actual price ranged
from $44.91 per barrel on November 21st to $143.95 per barrel on July 3rd. These large
increases and decreases are unprecedented. Prices have fallen further since this data was
obtained. The reasons for this increased variability are not the subject of this study and are
explained elsewhere18.
As mentioned in section 2 Ireland accounts for only 0.2% of world demand and the EU’s
share is 100 times larger than Ireland’s. Correspondingly, Ireland’s market does not affect
the price of crude oil and Ireland is a “price taker”.
Crude oil is imported into Whitegate by ship approximately every 9 days. The price paid
for each cargo is the average price of crude, as priced by Platts (Platts is a provider of
energy information including crude oil and refined prices), 5 days around loading day (2
days before loading day, the day of loading and 2 days after). These prices are “evened”
out over the month by trading on the futures market.
The pricing mechanism used for charging depends on the type of customer. There are two
segments: those who pay on the average of the current month and those who pay based on
a wholesale price that changes twice a week.
3.1.1 Refined Product Pricing - Month Average Customers

In this case, the price is based on Platts prices for refined products such as petrol and
diesel (Platts prices and the relationship with wholesale prices are examined in more detail
in section 3.2). There is an underlying relationship between refinery and crude oil prices
but in the short term the two do not always move synchronously (3.1.1). This is because
the price of refinery oil is not only dependent on the cost of its raw material but also on the
actual demand for petrol or diesel (for example demand for diesel is higher in winter when
it is also used as heating oil).
Figure 2 Refinery Versus Crude Oil Prices

1600 160
1400 140
1200 120
1000 100
$ per Barrel
$ per MT
800 80
600 60
400 40
200 20
0 0
16/01/2008
02/07/2008
13/08/2008
24/09/2008
08/10/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
12/03/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
21/05/2008
04/06/2008
18/06/2008
16/07/2008
30/07/2008
27/08/2008
10/09/2008
Ave Petrol USD MT Ave Diesel USD MT Europe Brent Spot Price FOB (Dollars per Barrel)
Source: Energy Information Administration, Platts
18
For example http://www.parliament.uk/commons/lib/research/briefings/snsg-02106.pdf
13
The month average is priced in dollars per tonne. These prices are only released at the end
of every month; the average is based on data for every available day during that month.
Product is sold either through the jetty (jetty sales) or is loaded onto trucks (rack sales).
The price charged will depend on the method of collection. In general, jetty sales would be
larger volumes so they would be more cost effective than collecting from a truck loading
rack. The final price charged is the month average for Platts (plus a Platts Premia, the
amount depending on the particular circumstances), added to which are “On-costs” to
account primarily for the costs for marine freight, insurance, port dues, storage and
throughput, evaporation costs etc (see 3.2).
The customers in this segment are larger oil companies. They are open to price volatility
(upward and downward movements) and must take the risk on pricing and currency
changes over the month. For example if the average of the previous month was $1,000 per
tonne but the current price is $1,200 the oil company can sell the product at a higher price
than it paid for it. The reverse is, of course, true in a falling market. The greatest level of
exposure occurs when prices either rise or fall in a short period of time e.g. days as
opposed to weeks.
3.1.2 Refined Product Pricing - Twice Weekly Price Changes

This price change method reflects the extent of oil price volatility in the market. Prices in
this case are denominated in euro cents per litre. They are based on Platts averages for
refined product, originally denominated in dollars, but changed to euros using official
ECB exchange rates, added to which are On-costs.
Since September 2008 prices for most companies have changed twice a week 19, on
Wednesday and Friday at midnight. Wednesday price changes use the average of the daily
Platts quotes from the previous 3 days while Friday’s price corresponds to 2 quote days. In
general, the “wholesale” price will move up and down directly with Platts prices20 and
Euro to US$ exchange rate. The gap between the two is explained in section 3.2.
Buyers, however, do not purchase at this wholesale price. Instead they buy at Platts plus
ConocoPhillips’ “mark-up” or margin (converted to euro cents per litre). The length of
time for which this mark up is fixed for varies according to contractual terms but in
general it is for one year.
Customers in this segment can only take delivery off the truck loading rack. The price
ConocoPhillips charge for product is in line with competitive forces in the market so as to
optimise their sales volumes and margins.
3.1.2 shows the area that ConocoPhillips’ customers come from.
19
Previously prices were changed on a weekly basis. As the volatility of the fuel price increased over the
past years, the industry has moved towards more regular price changes to protect both supplier and
customer against significant market movements. In the UK prices are changed daily.
20
It is important to note that when comparing ConocoPhillips wholesale prices with oil wholesalers (next
section) that ConocoPhillips do not deliver so the price charged will be lower.
14
Figure 3 Whitegate Customer Area
Derry
Belfast
Imports from UK
Dublin and Europe
Galway
Limerick/Foynes
New Ross
Cork
Source: ConocoPhillips Whitegate
It can be seen that, in general, it is only economical to buy from Whitegate if one operates
in the southern half of the country (it may also be economical if you are a large customer
who can purchase a large quantity and move it by ship to, for example, Dublin).
The ratio of average of month customers to twice weekly is 60/40.
15
The difference between the purchase price of crude and the price of the refined product is
the refinery margin. Due to the volatile nature of the market, as mentioned in section 2,
refining margins vary daily, shown in 3.1.2. The scale is not on this figure in order to
preserve commercially sensitive information. Given that the price of the crude oil varies
widely (especially in recent times) there is great uncertainty as to the size of the margin.
Figure 4 Whitegate Refinery Margin
Source: ConocoPhillips Whitegate
3.2 Wholesalers
The key point to note here is that oil importers/ wholesalers in this segment of the
market (approximately 70% of volume i.e. the portion apart from ConocoPhillips) do
not purchase crude oil; they import refined products such as petrol and diesel. It is
therefore incorrect to directly compare the price of crude oil with wholesale or retail
petrol and diesel prices. Instead wholesale prices should be compared to the relevant
Platts quotations for refined product taking into account US$ - v - Euro exchange rates.
For the most part, oil wholesalers buy on the average of the month and sell to distributors
or retailers. The wholesale prices change twice a week and are based on the average of
Platts over the previous 2 or 3 days, as relevant. The movements of wholesale and Platts
prices will not always match exactly, for example, due to periodic adjustments for
inflation and margin alterations but over time they should track each other closely.
Distributors or retailers pay this wholesale price minus a fixed rebate. The rebates are
fixed, for anything up to 5 years (Solus agreement, but increasingly are reviewed more
often). Therefore the price that the retailer pays for product should move up and down in
conjunction with Platts quotes. As mentioned previously, the size of this rebate depends
on a number of factors including:
♦ Whether or not an upfront payment has been granted as part of a Solus agreement,
16
♦ Volume of sales,
♦ Inland transport costs,
♦ Credit rating and credit terms applicable,
♦ Duration of the business relationship.
Wholesale prices are readily available (some are published on the oil companies’
websites) and are published together on a website www.fuelpricesonline.com.
The Agency has obtained wholesale prices from this source for all the major oil retailers in
Ireland and 3.2 to 3.2 compare relevant Platt’s quotations with wholesale petrol and diesel
prices in Ireland for each major firm in Ireland. Wholesale prices have also been acquired
directly from some of the major oil companies so that the www.fuelpricesonline.com data
can be verified.
The gap between the Platts quotes and the wholesale prices is explained below. In the
following figures the Platts quote21 for each day is the average of the high and low quote.
The original dollar figures are changed to euros using the official ECB rate on the relevant
day and finally changed to cents per litre using standard densities to match the wholesale
prices. The wholesale price includes the NORA levy of 1 cent per litre and excise
(currently 50.9 and 36.8 cents per litre for petrol and diesel respectively) and costs of
getting the product to Ireland to the point of the loading rack whilst the Platts data
exclude the NORA and excise.
Trend lines are added to each graph to facilitate comparison.
As a good measure to see how consistent the oil companies are in lowering and increasing
prices it is useful to compare the differential between the schedule price and the Platts
average. This is done in 3.2 to 3.2 under each of the figures. In this case to facilitate
comparison, NORA and excise duties are excluded.
The gap should be fairly constant during the year apart from some minor alterations to
account for inflation. This “gap analysis” is an area that requires further study over a
longer time period. The enormous volatility in product prices and exchange rates seen in
2008 does not help current analysis.
21
Platts quotes are refinery prices, exclude any supplier costs or taxes and charges.
17
Figure 5 Platts Quotes/ ConocoPhillips Wholesale Prices
140
120
100
Euro Cents Per Liter
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel ConocoPhillips Schedule Diesel
ConocoPhillips Schedule Petrol Linear (Platts Petrol) Linear (Platts Diesel)
Linear (ConocoPhillips Schedule Petrol) Linear (ConocoPhillips Schedule Diesel)
Source: Energy FuelPricesOnline, Platts
Table 1 Platts Variation Versus ConocoPhillips Wholesale Prices

Cents per Litre Petrol Diesel
Start 7.40 9.14
End 8.65 10.60
Maximum 8.69 10.68
Minimum 6.60 8.21
Average 7.47 9.18
18
Figure 6 Platts Quotes/ Campus Wholesale Prices
140
120
100
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel Campus Schedule Diesel Campus Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (Campus Schedule Petrol) Linear (Campus Schedule Diesel)

Table 2 Platts Variation Versus Campus Wholesale Prices
Start 14.70 17.52
End 15.95 18.89
Maximum 15.97 18.92
Minimum 14.70 8.89
Average 15.36 18.33
19
Figure 7 Platts Quotes/ Emo Wholesale Prices
140
120
100
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel EMO Schedule Diesel EMO Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (EMO Schedule Petrol) Linear (EMO Schedule Diesel)
Table 3 Platts Variation Versus Emo Wholesale Prices

Start 17.73 19.75
End 18.67 21.81
Maximum 18.68 21.86
Minimum 17.69 18.39
Average 18.33 21.08
20
Figure 8 Platts Quotes/ Esso Wholesale Prices
140
120
100
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel ESSO Schedule Diesel ESSO Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (ESSO Schedule Petrol) Linear (ESSO Schedule Diesel)
Table 4 Platts Variation Versus Esso Wholesale Prices

Start 13.28 19.75
End 15.10 21.81
Maximum 16.00 21.86
Minimum 12.34 18.39
Average 14.06 21.08
21
Figure 9 Platts Quotes/ Maxol Wholesale Prices
140
120
100
80
60
40
20
0
27/02/2008
02/01/2008
16/01/2008
30/01/2008
13/02/2008
12/03/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
21/05/2008
04/06/2008
18/06/2008
02/07/2008
16/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
19/11/2008
03/12/2008
Platts Petrol Platts Diesel Maxol Schedule Diesel Maxol Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (Maxol Schedule Petrol) Linear (Maxol Schedule Diesel)
Table 5 Platts Variation Versus Maxol Wholesale Prices

Start 14.66 17.87
End 15.95 19.34
Maximum 15.95 19.69
Minimum 14.66 17.87
Average 15.29 18.88
22
Figure 10Platts Quotes/ Morris Wholesale Prices
140
120
100
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel Morris Schedule Diesel Morris Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (Morris Schedule Petrol) Linear (Morris Schedule Diesel)

Table 6 Platts Variation Versus Morris Wholesale Prices
Start 14.77 18.01
End 16.04 19.55
Maximum 16.13 19.73
Minimum 14.70 16.69
Average 15.37 18.83
Figure 11Platts Quotes/ Topaz Wholesale Prices

140
120
100
80
60
40
20
0
16/01/2008
12/03/2008
21/05/2008
16/07/2008
19/11/2008
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
04/06/2008
18/06/2008
02/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
Platts Petrol Platts Diesel Topaz Schedule Diesel Topaz Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (Topaz Schedule Petrol) Linear (Topaz Schedule Diesel)
23
Table 7 Platts Variation Versus Topaz Wholesale Prices
Start 14.77 18.23
End 16.27 19.68
Maximum 16.49 20.54
Minimum 14.00 17.78
Average 15.57 19.14
Figure 12Platts Quotes/Texaco Wholesale Prices

140
120
100
80
60
40
20
0
02/01/2008
16/01/2008
30/01/2008
13/02/2008
27/02/2008
12/03/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
21/05/2008
04/06/2008
18/06/2008
02/07/2008
16/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
19/11/2008
03/12/2008
Platts Petrol Platts Diesel Texaco Diesel Texaco Schedule Petrol
Linear (Platts Petrol) Linear (Platts Diesel) Linear (Texaco Schedule Petrol) Linear (Texaco Diesel)

Table 8 Platts Variation Versus Texaco Wholesale Prices
Start 14.39 17.21
End 15.68 18.82
Maximum 15.74 18.97
Minimum 14.39 17.11
Average 15.26 18.37
24
Figure 13Platts Quotes/ TOP Wholesale Prices
140
120
100
80
60
40
20
0
21/05/2008
04/06/2008
27/08/2008
19/11/2008
02/01/2008
16/01/2008
30/01/2008
13/02/2008
27/02/2008
12/03/2008
26/03/2008
09/04/2008
23/04/2008
07/05/2008
18/06/2008
02/07/2008
16/07/2008
30/07/2008
13/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
03/12/2008
AA Petrol AA Diesel Top Schedule Diesel Top Schedule Petrol
Linear (AA Petrol ) Linear (AA Diesel) Linear (Top Schedule Petrol) Linear (Top Schedule Diesel)
Table 9 Platts Variation Versus TOP Wholesale Prices

Start 15.01 17.90
End 17.94 21.18
Maximum 17.94 21.20
Minimum 15.01 17.90
Average 15.91 19.48
To summarise, 3.2 to 3.2 and 3.2 to 3.2 show that, over the period under investigation,
wholesale prices have for the most part tracked Platts refinery prices and that the
variation between the two datasets remained fairly constant in increasing and
decreasing markets, when an allowance for inflation is taken into account.
As mentioned previously, the gap between Platts quotes and wholesale prices includes the
price of crude oil or refined product (where applicable), exchange rates, taxes,
transportation costs etc. 3.2 gives an example of these different costs for a large wholesale
oil company in Ireland. This company would buy on the average of the month and set its
wholesale prices twice weekly. The exact costs would vary over time and from location to
location but these are indicative of current costs of importing into Dublin.
In 3.2 “On Costs” includes all costs from jetty to loading rack including marine freight,
marine insurance, transit losses, off loading costs, port dues, storage and throughput, and
operational losses (evaporation).
25
Table 10 Petrol and Diesel Price Build-up early December 2008
Petrol Diesel Note
Cents per litre
Wholesale Price 92.1 93.1 NO VAT incl.
NORA Levy 1.0 1.0
Excise Duty 50.9 36.8
Wholesale Price Net of Excise and
NORA Levy 40.3 55.3
Platts Price 406.75 537.17 $ per tonne

Can be plus,
minus or 0
depending on the
Platts Premia -2.5 0.0 circumstances
Total Platts 404.3 537.2 $ per tonne
US$ to € 1.3 1.3 ECB Data
Platts Price 320.2 425.5 € per tonne
On Costs 26.5 30.5 € per tonne
Subtotal 346.7 456.0
Litres per tonne 1325.0 1183.0 Average Density
Cost of Product per litre 26.2 38.6
Estimated Gross Margin to Wholesale
Schedule Price (Wholesale Price Net of
Excise and NORA Levy - Cost of
Product per litre) 14.1 16.8 Cents per litre
Source: Industry Sources, Platts
The estimated gross margin includes the rebate given to distributors and or retailers. This
varies significantly and will depend on volume and distance travelled.
The remaining margin is what is available to the wholesaler. In this example the actual
margin would be approximately 2.5 cent per litre. This 2.5 cent per litre would be a
wholesaler selling to a decent sized service station. It is worth reiterating that this does not
include fuel card sales, which represent very significant volumes and are much more
competitively priced than “conventional” retail sales.
In this example the pump price is taken to be €1.01 per litre for petrol and €0.93 per litre
for diesel. In this case Government taxes and levies account for 69% of the petrol
pump price and 54% of the diesel price. The actual cost of product makes up 26%
and 37% respectively (3.2). This is very significant in the context of changing retail
prices (see discussion hereafter). The remainder, as discussed above, is accounted for by
inland delivery, credit and profit etc. (for wholesaler, distributor and retailer, sometimes of
course, these are the same company).
Table 11 Petrol and Diesel Prices –Cost of Product and Taxes

Petrol Diesel
Refinery Product Price 26% 37%
Government 69% 54%
Product + Government = 95% 91%
Pump Price 100% 100%
Source: Industry Sources, Platts
26
3.3 Oil Distributors /Retailers
This segment of the market buys from wholesalers or direct from Whitegate refinery based
on a fixed rebate off prices set twice a week. Oil distributors must share their margin with
the retailer, which dilutes it further.
The margin in the retailer segment of the market is generally quite small and will depend
on:
♦ Volume,
♦ Distance from port or distributor depot,
♦ Whether the station is owned by an oil wholesaler, a distributor or independently
owned (and in the latter case if there is a Solus agreement in place),
♦ Local competition, number and size of stations in the area and
♦ Presence of a forecourt shop/convenience store.
For independent retailers the volume of sales will on average be in the region of 0.5
to 2.5 million litres per annum. The gross margin at this level of the market is around
2.5 cent a litre; included in this would be the station’s operating costs.
The Agency has, on a confidential basis, reviewed actual pricing and rebate data for a
number of retailers; the figures are a close match to the margins presented above.
By comparison, the gross margin in the UK would be slightly higher, which reflects the
smaller number of petrol stations per capita, and correspondingly higher volume per
station.
Given the volumes involved, what might be thought of as small fluctuations can have an
important impact on the bottom line. For example, if a station could charge an extra cent,
on a volume of 3m litres over a year, this would result in an “extra” profit of €30,000.
A common misconception is that oil companies or retailers store product when the cost is
rising and sell it at later at the higher price. This is not generally possible due to the high
costs of storage and also to the fact that retailer’s tank sizes are strictly regulated under
planning regulations. Most retailers receive a delivery once a week, some once a day or
more.
Another topical concern is that diesel prices have become more expensive than petrol,
when historically the opposite was the case. This trend has been observed throughout
Europe. The International Energy Agency22 has said that longer-term increases in demand
from Europe and across the world (China especially) have left Europe ‘structurally short’
of diesel and hence refinery margins have increased. In the long term the amount of diesel
that is produced may increase to meet this additional demand and wholesale and retail
prices may fall.
The next section compares Platts quotes to retail prices.
22
International Energy Agency, Oil Market Report, October 2008.
27
3.2 presents a summary of the market.
Table 12 Setting of Price - Summary

Market Buys Buys from Price Sells to Price Price Examples
Segment Based Changes Based on
on
Refinery Crude International Platts Oil Monthly or Platts as a ConocoPhillips
Oil Market Crude Companies Twice benchmark Whitegate
or retailers Weekly
Wholesaler Refined Whitegate, Platts Oil Twice Platts as a Topaz

Product UK or quotes distributors Weekly for benchmark Maxol
European for or Distributors, Texaco
Refiners refined retailers or up to daily TOP
produc directly to for own Esso
t consumers stations Etc.
through
own fuel
stations
Distributor Refined Whitegate Platts Retailers, Twice Wholesale TOP

Product or large oil quotes directly to Weekly or minus a Esso
company for consumers daily for rebate East Cork Oil
refined through own stations Amber Oil
produc own fuel Etc.
t stations
Retailer Refined Whitegate, Platts Directly to Twice Wholesale Topaz

Product large oil quotes consumers Weekly or minus a Esso
company or for through daily for rebate Tesco
oil refined own fuel own stations Applegreen
distributors produc stations
t
28
3.4 Competitiveness of the Market
Oil company representatives have said repeatedly in public that the oil market in Ireland is
very competitive. This statement was reiterated in all the discussions the Agency had with
oil companies and with other industry sources that might be considered to be more
impartial than the former.
Two key metrics can be used to assess this statement:

• Oil company performance as measured by their company accounts and
• The number of stations in the market.
3.4.1 Oil Company Performance

3.4.1 presents data from the company accounts of a number of the larger oil companies in
Ireland.
Table 13 Oil Company Accounts

Conoco
2007 Maxol23 Topaz Esso Petrogas24 Chevron25 Phillips
Cost of €696,670,3 €1,698,130,0 €589,657,0 €140,762, €1,303,078,0
Sales 84 00 00 000 00 €2,257,785,000
Gross €39,966,6 €47,365,0 €47,635,0 €16,266,0 €49,209, €26,383,0
profit 58 00 00 00 000 00
5.7
% 2.8% 8.1% 11.6% 3.8% 1.2%
Operating €11,380,6 €6,098,0 €6,056,0 €7,144,0 €18,768,0
profit 10 00 €2,012,000 00 00 00
1.6
% 0.4% 0.3% 4.3% 0.6% 0.8%
Net profit €13,153, €30,385,0 €6,014,0 €3,229,0 €36,029, €17,158,0
pre tax 064 00 00 00 000 00
0.2
% 1.8% 1.0% 2.3% 2.8% 0.8%
Net profit €10,244,8 €26,674,0 €5,193,0 €2,736,0 €29,319, €14,091,0
after tax 31 00 00 00 000 00
1.5
% 1.6% 0.9% 1.9% 2.3% 0.6%
Source: Companies Registration Office
It is clear from this table that while cost of sales are large, profits are modest. This
would suggest that this is a high volume, low margin business. Profits are not
differentiated by activity i.e. profits on fuel sales are combined with profits from shop and
other forecourt sales e.g. Car Wash.
It would therefore appear that the very large profits such as those announced by oil
companies, for example, Royal Dutch BP, derive to a far greater extent from extracting
crude oil from the ground than from operations in the downstream segment of the market.
Note that vertically integrated oil companies operate each segment of their business
separately.
23
Note that these figures refer to Maxol’s operations in the Republic of Ireland and Northern Ireland.
24
Applegreen is a brand name used by Petrogas
25
Trading as Texaco
29
3.4.2 Numbers in the Market
As stated in section 2.4, the total number of stations has been in decline for the last 20
years or so. However, at a national level at least the number of stations per capita could
suggest that the market is more competitive than the UK or Northern Ireland26. Experian
Catalist have stated that 105 sites closed in 2007, following 107 closures in 2006 27. A
number of new sites opened in the same period. These new stations tend to be larger in
size and boast retail outlets, which offer a wide range of goods, particularly hot beverages
and food. It is argued that whilst margins are small on the fuel side of the business, the
margin on a cup or coffee, for example, can be relatively large. The cost associated with
fitting out a store is significant, up to €500,000 in the case of larger sites.
It is known that Tesco’s expansion plans for their fuel business in Ireland has been
constrained by current planning restrictions. The Irish Petroleum Retailers Association
have expressed concern about the spread of combined service station/retail outlets such as
those operated by Tesco, on the basis that increasing numbers of large stations (using a
large store to subsidise the fuel side of the business) drive smaller operators out of the
market.
They are of the opinion that the result in years to come will be that there will be a much
smaller number of stations, therefore customers will have to travel further to purchase
fuel, which negates some of the effect of current lower prices.
Another indication of the current competitiveness of the market is the limited presence of
multi -national oil companies. Only Esso and Texaco remain after Shell and Statoil sold
their Irish interests to Topaz. The consensus in the industry is that the profit to be made in
Ireland was not sufficient to make their continued presence worthwhile.
26
As stated earlier it is acknowledged that fuel markets are local in nature; therefore data at this level is
required in order to make a definitive statement.
27
Some of these closures, particularly in Dublin, would have been due to the high value of the land and
ensuing property development.
30
4 Collection of Retail Price Data
Petrol and diesel retail prices in Ireland are available from a number of Government
sources, from AA Ireland and via websites such as Pumps.ie. As part of this study, the
Agency also conducted 4 widespread and detailed surveys in November; the results of
which are detailed in section 4.2.
4.1 Retail Price Data

4.1.1 AA Ireland Data Collection
Data collected by AA Ireland comes from its rescue fleet, members of the public and
some, directly from the oil companies. A national average is published for petrol and
diesel each month. Comparisons are also made with data from motoring groups
throughout the world. While the data is considered to be relatively accurate and it provides
a good time-series, in the current climate of rapidly fluctuating prices, data published
monthly is of limited use.
AA Ireland is seeking to increase the frequency of data releases and has had initial
discussions with the Agency on a proposal for a joint survey.
4.1.1 presents data from AA Ireland for the period July 2000 to November 2008. The
increasingly volatile nature of prices is evident as is the increasing price of diesel, in
comparison to petrol.
Figure 14Petrol and Diesel Prices

150
140
130
120
Cents Per Litre
110
100
90
80
70
60
01/04/2001
01/07/2001
01/10/2001
01/01/2002
01/04/2002
01/07/2002
01/10/2002
01/01/2003
01/07/2004
01/04/2005
01/07/2005
01/10/2008
01/07/2000
01/10/2000
01/01/2001
01/04/2003
01/07/2003
01/10/2003
01/01/2004
01/04/2004
01/10/2004
01/01/2005
01/10/2005
01/01/2006
01/04/2006
01/07/2006
01/10/2006
01/01/2007
01/04/2007
01/07/2007
01/10/2007
01/01/2008
01/04/2008
01/07/2008
Petrol Diesel
Source: AA Ireland
The fall in November 2008 (11.8% for petrol and 8% for diesel) is the largest
increase or decrease recorded over the period. By comparison in the UK28, the fall in
November was also a record with a reduction of 10.8% for petrol and 7.6% for
diesel. It will be noted that these decreases are less than those recorded in Ireland, albeit
28
Data from The AA. www.theaa.com
31
the data collection methodology differs in the UK so direct comparisons are not entirely
reliable
It is interesting to note the type of information that is published in the UK by The AA:
London recorded the highest price for unleaded at 95.8 pence per litre (ppl) followed by
Northern Ireland at 95.5ppl. The North West and Yorkshire and Humberside recorded the
lowest price for unleaded at 94.2ppl. Scotland recorded the highest diesel price at
109.4ppl. Yorkshire and Humberside has the cheapest diesel at 108.2ppl.
Supermarket prices for unleaded also fell over the month by 10.8ppl to 93.4ppl. The gap
between supermarket prices and the UK average for unleaded has fallen to 1.5ppl.
In the UK, Experian Catalist collects fuel price data on a daily basis. The AA uses this
data to publish a national average price for petrol and diesel each day. In addition, by
inputting a postcode on the AA website, consumers can see prices in their local area. Data
are obtained from fuel card transactions made at stations the day before. The fuel card is
unbranded so it can be used in any filling station. The Agency has had initial discussions
with Experian Catalist to see if a similar process could be set up in Ireland.
4.1.1 compares AA Ireland retail prices with Platts quotes, the dataset is limited in
that trends are aggregated over a month but it can be seen that the trends broadly
move in the same direction. The available of weekly or daily data would greatly improve
the quality of the analysis and therefore the conclusions that could be made.
Figure 15AA Ireland versus Platts

160
140
120
100
Cents Per Litre
80
60
40
20
0
02/01/2008
30/01/2008
13/02/2008
27/02/2008
26/03/2008
09/04/2008
07/05/2008
21/05/2008
02/07/2008
16/01/2008
12/03/2008
23/04/2008
04/06/2008
18/06/2008
16/07/2008
30/07/2008
13/08/2008
27/08/2008
10/09/2008
24/09/2008
08/10/2008
22/10/2008
05/11/2008
AA Petrol AA Diesel Platts Petrol Platts Diesel
Source: AA Ireland, Platts
4.1.2 Website Data

Data collected as user driven content from websites such as pumps.ie, while an admirable
initiative for consumers, is problematical for studies of this nature in that there is no
verification of user driven content. An examination of the data suggests that there are
32
problems with accuracy, more so regarding names and locations of sites, rather than
incorrect prices.
4.1.3 Central Statistics Office Data Collection

There are two official sources of data in Ireland, the Central Statistics Office (CSO) and
the Department of Communications, Energy and Natural Resources (DCENR).
As part of its regular inflation report, the CSO collects data from approximately 82
stations throughout the country on a monthly basis and publishes a national average price
for petrol and diesel. Details of the sampling frame used are not publicly available but the
robustness of the data is not in question. This information is, however, published with a
significant time lapse. The latest data available at the time of writing (December 10 th)
relates to October 14th. Given that prices now change twice a week the data’s usefulness is
therefore extremely limited and is not an accurate reflection of the level or frequency of
price changes that actually occur in the market.
4.1.4 EU Data Collection

The EU Market Observatory for Energy publishes consumer prices and net prices
(excluding duties and taxes) of petroleum products in EU member states each week. Data
gathered by DCENR are provided to the EU for this purpose. These prices have attracted
significant media attention in Ireland. There are a number of issues with regard to this
data. An independent company, Ernst and Young, on behalf of the Irish Petroleum
Industry Association, currently collects petrol and diesel prices. As mentioned in section
2, the following are members of the IPIA: Campus, ConocoPhillips, Emo Oil, Esso,
Maxol, Chevron, TOP and Topaz. Only 5 oil companies are surveyed at a total of 210 sites
nationally. The data may not be representative, as there is a significant portion of the
market serviced by operators, such as Tesco and Applegreen, who are not IPIA
members.
The prices are only collected once a month and are communicated to DCENR.
DCENR then reports these figures to the Commission; the result is that the same
figures are published for Ireland for 4 weeks in a row. While this system did not cause
difficulties when prices were stable, it cannot accommodate the frequent price fluctuations
that have been a feature of the market in more recent times. In addition, the reporting
system varies across member states. The result is that comparisons across countries are not
valid and can be quite misleading. Data is not used in this report for these reasons.
Both DCENR and the European Commission are aware that improved data is required as a
matter of urgency. Since the Agency started this study, significant progress has been made
in this regard. DCENR has met with industry representatives through the IPIA, with a
view to improving data in the short term (DCENR is also aware of the need to consult
other retailers). The Agency is aware from its discussions with the oil industry in recent
months that this view is shared. DCENR has indicated that it is establishing a working
group of industry and relevant government bodies, as a matter of priority, with a view to
reviewing and improving the national price data collection system.
33
As a first step towards improving the comparability of data at EU level, across member
states, the European Commission has issued a questionnaire to all member states. The
results will be used to design a system that will better capture comparable information.
Ireland and other Member States are now actively engaging in dialogue with the
Commission with a view to establishing a more transparent reporting system across the
EU.
34
4.2 National Consumer Agency Surveys
The NCA conducted 4 major price surveys on consecutive Fridays in November, the
purpose of which was to ascertain if falling international prices were being passed on to
consumers in a timely manner. The surveys also highlight the inadequacy of collecting
data once a month.
An average of 302 stations were surveyed on each Friday in November by telephone

and by visits from NCA inspectors. The sample frame was based on population per
county; it was amended slightly to account for market share. In order to maintain
consistency, where possible, the same sites were surveyed each Friday.
There are a number of caveats with the results:

♦ Prices would have changed during each Friday; this would not be reflected here,
♦ A larger share of the retailers co-operated with Agency telephone requests on the
first Friday than in subsequent surveys (the number of sites surveyed was
increased in order to mitigate this but it was not possible to eliminate the effect),
♦ A proportion of the retailers may have given incorrect prices, but there was some
verification of the telephone survey by NCA Inspectors each Friday. As a result
the issue is not considered to be to be significant.
Presentation of the results is split into two sections, the first looks at the data from
November 7th. The second collates the results over the 4 Fridays and compares data with
international Platts data.
All the prices collected on November 7st were gathered by Agency staff. This was not the
case on subsequent Fridays where some data was provided directly by the oil companies.
In order to obtain this data the Agency had to make concessions with regard to how the
data would be used. This, in addition, to decreased cooperation means that for 14th, 21st
and 28th November only national averages can be presented.
35
4.2 presents data for petrol for November 7th, 4.2 for diesel.
Table 14 Petrol Prices 7 November 2008

No. of
Petrol Stations Average Max Min Mode Variation
Carlow 4 109.9 112.9 106.9 109.9 6.0
Cavan 4 114.9 116.9 112.9 114.9 4.0
Clare 8 115.7 121.9 112.8 N/A 9.1
Cork 31 112.9 117.9 107.9 113.9 10.0
Donegal 10 113.0 114.9 109.9 112.9 5.0
Dublin 100 113.0 119.9 108.9 112.9 11.0
Galway 14 113.4 115.9 109.9 112.9 6.0
Kerry 10 111.3 113.9 109.9 109.9 4.0
Kildare 13 112.3 115.9 109.8 114.9 6.1
Kilkenny 7 112.6 115.9 109.8 113.9 6.1
Laois 4 113.9 114.9 112.9 114.9 2.0
Leitrim 3 112.9 113.9 112.0 N/A 1.9
Limerick 13 113.5 115.9 110.9 115.9 5.0
Longford 4 109.9 110.9 108.9 109.9 2.0
Louth 6 113.9 117.9 110.9 N/A 7.0
Mayo 8 112.5 115.9 109.9 110.9 6.0
Meath 14 112.4 115.9 109.8 111.8 6.1
Monaghan 4 112.2 113.9 109.9 N/A 4.0
Offaly 6 113.6 120.0 109.9 109.9 10.1
Roscommon 4 112.2 113.9 110.9 N/A 3.0
Sligo 4 109.9 112.9 107.9 N/A 5.0
Tipperary 10 112.6 114.9 109.4 114.9 5.5
Waterford 7 111.6 117.9 107.9 111.9 10.0
Westmeath 8 111.1 113.9 109.5 109.9 4.4
Wexford 11 112.3 117.9 109.9 109.9 8.0
Wicklow 8 112.4 115.9 109.8 111.9 6.1
National 315 112.8 121.9 106.9 112.9 15.0
Source: NCA
36
Table 15 Diesel Prices 7 November 2008
No. of
Diesel Stations Average Max Min Mode Variation
Carlow 4 111.2 111.9 109.9 111.9 2.0
Cavan 4 116.2 117.9 114.9 115.9 3.0
Clare 8 116.4 121.9 112.8 116.9 9.1
Cork 31 113.8 116.9 108.9 113.9 8.0
Donegal 10 112.9 114.9 109.9 112.9 5.0
Dublin 100 113.7 122.9 109.9 113.9 13.0
Galway 14 114.3 116.9 112.9 113.9 4.0
Kerry 10 111.7 113.9 109.9 109.9 4.0
Kildare 13 113.0 115.9 109.8 114.9 6.1
Kilkenny 7 113.6 115.9 110.9 114.9 5.0
Laois 4 113.4 114.9 110.9 114.9 4.0
Leitrim 3 112.6 112.9 112.0 112.9 0.9
Limerick 13 114.6 116.9 110.9 115.9 6.0
Longford 4 112.9 113.9 110.9 113.9 3.0
Louth 6 114.7 117.9 112.9 114.9 5.0
Mayo 8 112.1 115.9 109.5 110.9 6.4
Meath 14 113.3 115.9 111.8 111.8 4.1
Monaghan 4 111.9 113.9 109.9 N/A 4.0
Offaly 6 113.6 121.0 109.9 109.9 11.1
Roscommon 4 112.2 113.9 110.9 N/A 3.0
Sligo 4 110.2 112.9 107.9 109.9 5.0
Tipperary 10 112.1 114.9 108.9 113.9 6.0
Waterford 7 112.3 117.9 108.4 112.9 9.5
Westmeath 8 112.0 113.9 109.9 109.9 4.0
Wexford 11 112.5 117.9 109.9 112.9 8.0
Wicklow 8 112.4 115.9 109.8 111.9 6.1
National 315 113.4 122.9 107.9 113.9 15.0
Source: NCA
The average data is most valuable here. The data illustrates that there is significant
variation across the country and also within individual counties. This is not surprising
as the survey captured data from all segments of the market, from small independent
retailers to large company owned stations or supermarket retailers. The variation is also
the result of the particular market characteristics in each local area.
If one takes the natural assumption that each station will attempt to gain the maximum
price for its products, it will charge the maximum price the local market can bear. In areas
where there are a relatively large number of stations, the average price would be expected
to be lower than in areas where there are few stations and where such stations would also
be further away from each other. This is indeed the case in Dublin and Cork where the
average is close to the national average. There are still significant variations within these
counties, which reflect the situation in local or “micro” markets where choice is not so
readily available.
The current survey is not detailed enough to make firm conclusions at the county or micro
level. Data would need to be collected on a long-term basis by site in order get an accurate
picture at that level.
37
4.2 and 4.2 present the combined results from November 7, 14, 21 and 28.
Table 16 National Results Petrol

Petrol Nov-07 Nov-14 Nov-21 Nov-28
Average 112.8 110.2 107.5 102.7
Max 121.9 116.9 115.9 111.9
Min 106.9 103.9 99.8 96.9
Mode 112.9 109.9 109.9 99.9
Variation 15.0 13.0 16.1 15.0
No. of Stations 315 293 318 282
Source: NCA
The average national price fall in petrol over the month was 10.1 cent (8.9%).
Table 17 National Results Diesel

Diesel Nov-07 Nov-14 Nov-21 Nov-28
Average 113.4 111.5 108.6 104.0
Max 122.9 120.0 120.9 111.9
Min 107.9 105.8 99.8 98.9
Mode 113.9 111.9 109.9 104.9
Variation 15.0 14.2 21.1 13.0
No. of Stations 315 293 318 282
Source: NCA
The average national price fall in diesel over the month was 9.4cent (8.2%).
Over the same period (there is a few days allowance given for the fact that product may
not be ordered, delivered and paid for on the same day) Platts prices fell by somewhere in
the region of 35% - 21% for petrol and 19%- 16% for diesel.
At first this appears to suggest that all the price reductions are not being passed onto
consumers but, as stated in section 3 a large part of the pump price (69% for petrol and
54% for diesel in the example given is made up of fixed Government excise and the
NORA levy). This insulates the pump price against wider variations in price. Taking this
into account29 the data indicates that saving are being passed on to consumers. It
should be noted, however that this is a very short time period in which to make definite
conclusions. Data would need to be monitored on an ongoing basis.
In the course of discussions with oil companies the Agency has seen confidential daily
data over the period of a year plotting average daily retail prices for company owned sites
compared with Platts data. Again, for the most part, the trends move in the same direction.
In conclusion, at national level, data in this section suggests that price reductions in
refined product are passed onto consumers in good time but the time period that is
studied here is relatively short. The data is not sufficient to make this conclusion at
29
I.e. for petrol that there were reductions of 35% to 21% in approximately 26% of the product price.
38
the county or local level30. Improved data collection at national and local level is
required to make a more definite statement on the matter.
5 Conclusions
The purpose of this study was twofold; firstly to ascertain if price changes at international
level are passed on to consumers in good time and secondly to increase transparency
relating to how the oil industry works so that consumers may better understand how the
price they pay for fuel is set.
Oil companies do not buy crude oil; instead they purchase refined products such as
petrol and diesel. It is therefore more relevant to compare pump prices with refined
product prices (as benchmarked by Platts). The ConocoPhillips refinery does buy crude oil
but their pricing strategy is also based on Platts prices for refined product. In the long term
crude oil prices will match Platts, but not in the short term.
Over the period of the study, which was from 2nd January 200831 to early December
2008, wholesale and retail prices do appear to track Platts quotes closely in terms of
scale, direction and timing. It is thus concluded that at the national level, prices
changes are passed on the consumers in good time.
Also at a national level, the retail market shows strong evidence of competition
between players. Evidence of this is the low level of profits made by oil companies, the
number of stations that have closed in recent years and the increased emphasis on making
profit through retail outlets attached to service stations. Based on the data currently
available, it is not possible to make conclusions at a county or local level. There are
some indications, however, that the market may be more competitive than the UK, such as
the number of stations per capita.
In summary, the price of petrol and diesel rises because of increases in refinery prices.
Ireland is a price taker due to its relatively small market size. When these prices fall,
however, what forces petrol and diesel prices back down is simply competition. At a
national level the available data supports this assertion. At local level, in a competitive
market, one station will lower price, and will attract more volume. In turn this forces
competitors to do the same. This will not be the case where there are limited numbers of
stations in an area.
There are a number of issues, however, with regard to the price data that is available.
Currently, price data is collected once a month. The Agency's surveys show that collecting
data at this frequency is of limited use to consumers. DCENR is making progress on
improving the frequency and quality of data collection through discussions with the
industry. If accurate data could be sourced, it would be put on the Agency’s website and
30
In some cases, for sites with lower volume, retailers are inclined when prices fall significantly in a short
period of time to resist passing on the reduction too quickly in order to avoid loss on what they have in
stock.
31
The reason for choosing a relatively short period of time was to simplify the analysis as much as possible.
A longer-term study would have required correcting for changing distribution costs, longer term inflation
etc.
39
made available in a format that could be used by newspapers for those without Internet
access. Consumers could then compare these averages with the advertised prices at
stations to see if they are being offered a "fair price".
As highlighted previously, current data availability in the Irish market is insufficient to

analyse price changes at the local level with any degree of certainty. There is scope for
enhancement in analysis and reporting, and improvements in this area could serve to better
inform consumers of general trends in petrol and diesel prices and to place a sustained
spotlight on the competitive environment in this important sector.
40
Annex 1 Investigations
Investigations
As mentioned in section 1, there is a widely held view that when the price of crude oil
increases, petrol and diesel prices at the pump rise quickly, but when the price of crude oil
decreases, petrol and diesel prices are slow to fall. Prices in this case are sometimes
referred to as being “sticky”.
This is a view, which is put forward in many countries throughout the world. This section
details the investigations from a number of countries.
USA
Over the past several years, the Energy Information Administration (EIA)32 has
extensively studied the relationships between wholesale and retail markets for
transportation fuels. In the course of the analysis, EIA found that the relationships between
spot and retail prices are consistent and predictable, to such an extent that changes in spot
prices can be used to forecast subsequent changes in retail prices for the appropriate
regions.
Austria
The Competition Authority in Austria33 built up (with the help of auto-touring
associations) a huge data bank covering on average 1700 (out of approximately 2500)
gasoline stations over a period of five years. The result of the econometric estimations
pointed to a lagged response (of approximately 2 days) of Austrian prices if Platts
notations go down in comparison to the reaction to an upward movement of Platts
notations.
Portugal
A Report by the Competition Authority34 on the Fuel Market in Portugal found that the
main elements making up the recommended pump price of 95-octane petrol are: tax at
around 59.2%; the ex-refinery cost, at around 31.4%; and the retail component at around
8%. Storage and transport account for 1.4%.
In the case of diesel, the main elements making up the recommended pump price are:
tax at around 47%; the ex-refinery cost, at around 42.2%; and the retail component at
around 9.2%. Storage and transport account for 1.6%.
When the tax element is factored out, around 80% of the recommended pump price stems
from the ex-refinery price, with the logistical element (storage and transport) not
accounting for more than 3.5%.
32
http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2003/gasolinepass/gasolinepass.htm
33
http://www.bwb.gv.at/BWB/English/annual_report_2006.htm
34
http://www.concorrencia.pt/en/publications/competition.asp
41
In terms of the move in recommended pump prices (excluding tax), ex-refinery prices in
Portugal reflect the Rotterdam CIF price (Platts NWE platform). In addition, as regards
petrol, the quotations move parallel to the New York price.
In the same way, the move in recommended pump prices for 95-octane petrol and for
diesel (excluding tax) in the first months of 2008 reflect the move in the ex-refinery price,
since the logistical and retail costs were constant during the period.
Other Studies
The Polish and Spanish Competition Authorities are also conducting investigations, as is
the European Commission35.
The Commission’s initial results have found that consumer prices so not react more
rapidly to positive price shocks than negative ones. The EU study is based on Oil Bulletin
data however, which, as discussed is not accurate for all member states.
35
The report is not available on line.
42

NCA Petrol and Diesel Price Investigation

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NCA Petrol and Diesel Price Investigation

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Investigation into

Petrol and Diesel Price Movements

In compiling this investigation, the Agency has:

This study was conducted within the following parameters:

It is important to note that the vertically integrated companies in Ireland operate as

The refinery is small by international standards however it runs permanently10 at

The refinery sells to over 100 customers (see Section 3)

The key players in this segment are:

There are four main types of service station in Ireland:

3.1 Whitegate Refinery

Figure 1 Europe Brent Spot Price17 January to December 2008

Source: Energy Information Administration

3.1.1 Refined Product Pricing - Month Average Customers

Figure 2 Refinery Versus Crude Oil Prices

3.1.2 Refined Product Pricing - Twice Weekly Price Changes

3.1.2 shows the area that ConocoPhillips’ customers come from.

Source: ConocoPhillips Whitegate

The ratio of average of month customers to twice weekly is 60/40.

Figure 4 Whitegate Refinery Margin

Source: ConocoPhillips Whitegate

Trend lines are added to each graph to facilitate comparison.

Source: Energy FuelPricesOnline, Platts

Table 1 Platts Variation Versus ConocoPhillips Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Source: Energy FuelPricesOnline, Platts

Table 3 Platts Variation Versus Emo Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Table 4 Platts Variation Versus Esso Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Table 5 Platts Variation Versus Maxol Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Figure 11Platts Quotes/ Topaz Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Figure 12Platts Quotes/Texaco Wholesale Prices

Source: Energy FuelPricesOnline, Platts

Source: Energy FuelPricesOnline, Platts

Table 9 Platts Variation Versus TOP Wholesale Prices

Platts Price 406.75 537.17 $ per tonne

Table 11 Petrol and Diesel Prices –Cost of Product and Taxes

The next section compares Platts quotes to retail prices.

Table 12 Setting of Price - Summary

Wholesaler Refined Whitegate, Platts Oil Twice Platts as a Topaz

Distributor Refined Whitegate Platts Retailers, Twice Wholesale TOP

Retailer Refined Whitegate, Platts Directly to Twice Wholesale Topaz

Two key metrics can be used to assess this statement:

3.4.1 Oil Company Performance

Table 13 Oil Company Accounts

4.1 Retail Price Data

Figure 14Petrol and Diesel Prices

Figure 15AA Ireland versus Platts

AA Petrol AA Diesel Platts Petrol Platts Diesel

Source: AA Ireland, Platts

4.1.2 Website Data

4.1.3 Central Statistics Office Data Collection

4.1.4 EU Data Collection

An average of 302 stations were surveyed on each Friday in November by telephone

There are a number of caveats with the results:

Table 14 Petrol Prices 7 November 2008

Table 16 National Results Petrol

Table 17 National Results Diesel

As highlighted previously, current data availability in the Irish market is insufficient to

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