The Pump Price Has Nothing to Do With the Barrel in the Ground
Every time a conflict breaks out somewhere in the world, petrol prices spike within hours. The explanation we're given is always the same: oil is more expensive. But is that really true?
The fuel you're about to put in your tank was extracted months ago, shipped, refined, and stored. Its production cost was set before the crisis. Yet the price changes overnight. Why?
Futures Markets: The Real Master of Petrol Prices
The pump price doesn't follow the cost of oil already produced — it follows the price of futures contracts, i.e., financial bets on what crude oil will cost in the future. When a war threatens supply routes, futures prices soar and distributors immediately adjust retail prices, even if their tanks are full of fuel purchased at lower prices.
It's legal, widespread, and completely opaque for the average consumer.
Rockets and Feathers: Prices Rise Fast, Fall Slow
Economists call it "rockets and feathers": when crude rises, petrol prices at the pump shoot up like a rocket. When crude falls, pump prices drift down like a feather — slowly, partially, with long delays.
This asymmetry has been documented in dozens of countries. It's not accidental: it's a deliberate pricing strategy that maximises margins in every market phase.
Why Doesn't the State Intervene?
Here's the part nobody says out loud: the State is an indirect beneficiary of high fuel prices. VAT is calculated as a percentage of the final price. The higher the petrol price, the higher the VAT collected. The State has a structural incentive not to break the mechanism.
- Temporary excise duty cuts are used only as exceptional political tools
- Price caps on consumer prices are rare and short-lived
- Windfall taxes on oil company extra profits are applied reluctantly
What You Can Actually Do
In the short term, options are limited: compare prices between stations, use self-service instead of attended pumps, take advantage of loyalty cards. In the medium term, the most effective alternative is reducing dependence on the private car or considering vehicles with alternative powertrains.
Knowing the mechanism won't lower prices, but it will prevent you from believing explanations that don't hold up.