QUICK ANSWER
The pump price of petrol or diesel is mainly crude oil cost, refining, taxes, and distribution and retailer margins. Crude oil prices move with global supply and demand, and exchange rates matter because oil is priced in US dollars. Taxes often make up a large share, which is why prices differ so much between countries.
What makes up the pump price
| Component | What it covers |
|---|---|
| Crude oil | The raw material; the biggest swing factor |
| Refining | Turning crude into petrol and diesel |
| Taxes and duties | Fuel duty, sales or value-added tax; often a large share |
| Distribution and marketing | Transport, storage and the retailer’s margin |
Why prices keep changing
- Oil supply decisions by major producing countries.
- Global demand rising or falling with the economy.
- Geopolitical events that threaten supply routes.
- Exchange rates, since oil is priced in US dollars.
- Seasonal demand, such as summer driving seasons.
- Tax changes by governments.
How often prices are updated
It depends on the country. Some let retailers change prices freely; others set or review prices on a fixed schedule, such as monthly. Price changes at the pump often lag behind crude oil moves.
Frequently asked questions
Why don’t pump prices fall as fast as oil?
Retailers may still be selling fuel bought at higher prices, and taxes don’t fall with oil.
Why is diesel sometimes pricier than petrol?
Different demand, refining and tax treatment can push diesel above petrol.
Can governments control fuel prices?
Some do through taxes, subsidies or regulated pricing; others leave it to the market.
Sources
- US Energy Information Administration: what goes into fuel prices