- Title: MARKETS-OIL Motorists say drop in crude oil prices not yet reflected at pumps
- Date: 11th December 2014
- Summary: LONDON, UNITED KINGDOM (DECEMBER 11, 2014) (REUTERS) (SOUNDBITE) (English) HEAD OF ANALYSIS AT LLOYDS LIST, NEIL ATKINSON, SAYING: "I think there is no doubt whatsoever that for countries which are heavily dependent on oil imports to satisfy their energy needs, that the lower price for oil should act as an enormous stimulus to their economy. What isn't obvious is that the stimulus provided by lower oil prices actually translates into significantly higher demand for oil because there isn't that elasticity that we used to see 30 years ago. But there is no doubt that if consumers are buying their fuel at the pump or heating their homes, they will be spending less money on that energy, they will have more money available to spend in other parts of the economy."
- Embargoed: 26th December 2014 12:00
- Keywords:
- Topics: General
- Reuters ID: LVA92FFMFEQOC9M5B27R3MOM80EM
- Story Text: Motorists should expect petrol prices to drop in the coming weeks according to a marine trade analyst who on Thursday (December 11) told Reuters that it takes a while for a drop in crude oil prices to be passed on to consumers.
Oil edged higher on Thursday towards $65 a barrel helped by a weaker U.S. dollar, although prices remained close to a five-year low on signs that already ample supply will be even more plentiful in 2015.
Motorists Reuters spoke at a petrol station in London said they hadn't yet noticed a significant drop in fuel prices as a result.
"It is better than it has been but still not as low as it should be, would be the way I would say it. I think they are making a bit too much profit off us, off all the other taxes as well, even though they heavily taxing the petrol stations, it's about time we saw some of those cost prices as well," said one driver.
"When they go down, they don't go down half as quick as they go up, they need to react quicker so that we get more benefit from it, rather than just companies," said another Londoner after filling up his car.
One truck driver said the price of fuel has been too expensive for too long.
"Petrol companies have been ripping us off for a long while, we all know it, it's about time something was done."
However, Head of Analysis at Lloyds List, Neil Atkinson, offered some reassurance to motorists, saying they should expect some savings at the pumps very soon.
"The price of oil products doesn't follow crude prices immediately because the point about oil products is that those products have been produced by refining crude oil and that will have happened weeks, if not months ago, and the price of the product at the pump has to reflect the price of the crude that was refined and the cost of refining. So what we will see as time goes on as cheaper crude oil comes into the system and is refined and turned into products those products will be cheaper," said Atkinson.
Crude prices sank on Wednesday (December 10) as OPEC [Organization of the Petroleum Exporting Countries] forecast an increasing supply surplus in 2015, U.S. crude inventories unexpectedly rose and OPEC's most influential voice, Saudi Arabia's oil minister, shrugged off the need for an output cut.
Saudi Arabia remains committed to its output production of 30 million barrels of crude oil a day.
At the meeting, Saudi Arabia and its Gulf allies urged fellow OPEC members to combat the growth in U.S. shale, which needs relatively high prices to be economic and has been eroding OPEC's market share, by resisting output curbs.
But Atkinson says while the surplus may be hurting OPEC nations in the short term, it could go a long way towards off-setting fears of a recession for other countries.
"I think there is no doubt whatsoever that for countries which are heavily dependent on oil imports to satisfy their energy needs, that this lower price for oil should act as an enormous stimulus to their economy. What isn't obvious is that the stimulus provided by lower oil prices actually translates into significantly higher demand for oil because there isn't that elasticity that we used to see 30 years ago. But there is no doubt that if consumers are buying their fuel at the pump or heating their homes, they will be spending less money on that energy, they will have more money available to spend in other parts of the economy," he said.
Traders are now eyeing an increasingly competitive battle for market share among OPEC exporters, for clues on when and at what price they would step in to help balance oil markets. - Copyright Holder: REUTERS
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