In theory, the price of petrol should be tied closely to the price of unprocessed crude oil. A rise in the price of crude often coincides with a rise in the price of petrol at the pump a few weeks later, an effect which is visible in the chart above.
The chart shows the price of a barrel of oil at market prices against the average price of a litre of petrol at a pump in the UK. During last winter the price of crude oil rose from $111.89 per barrel hitting a peak of $119 on 8 February. That rise correlated with a rise in the price of petrol several weeks later from 132p up to a peak of 140p on 11 March.
Brian Madderson, chairman of the Petrol Retailers’ Association, says this 8p rise in the price of petrol last winter cannot be explained by basic supply and demand, unusual geopolitical events or other factors. He said the PRA has repeatedly warned the regulators that the oil price appears to have been manipulated and that any manipulation of the benchmark oil price over a decade could have cost motorists “thousands of pounds each”. The alleged manipulations could have taken place because like Libor – the interest rate measure that banks were found to have rigged – the market is unregulated and relies on the honesty of the firms to submit accurate data about all their trades.
