Oil dearer, pump cheaper — and the other way round

What is a litre actually made of?

The amber bands are tax. They are close to flat over time for duty, and move with the price for VAT. The blue bands are cost: crude, and the residual that covers refining, shipping, storage, distribution and the forecourt.

Has oil ever been dearer than today while petrol was cheaper?

Yes, and the site checks for it automatically every night. Two versions of the test: one comparing the barrel price in dollars, which is how the oil market quotes it, and one comparing crude converted into pence per litre, which takes the exchange rate out and leaves duty, VAT and the margin to explain the rest.

Which weeks, measured in dollars a barrel?

In May 2008 Brent was $123 against $116 now, yet petrol was 111.0p against 172.0p, 61.0p cheaper: crude adds 15.2p, duty adds 2.6p, VAT adds 12.1p, the refining and retail margin adds 31.0p. Sterling accounts for about 18.4p of the crude difference.

Which weeks, measured in pence a litre?

In March 2026 Brent was 58.1p a litre against 54.6p a litre now, yet petrol was 148.8p against 172.0p, 23.2p cheaper: crude takes off 3.5p, VAT adds 3.9p, the refining and retail margin adds 22.8p.

The difference between the two lists is the exchange rate. Brent is priced in dollars, so a weaker pound raises the cost of a litre even when the barrel price has not moved.

When has the margin run unusually wide?

The margin here is a residual: whatever is left after crude, duty and VAT. 158 weeks in the series sit more than 1.5 standard deviations above their own 52-week rolling average.

A wide margin has several innocent explanations — refinery outages, the lag between buying a cargo and selling it, and crack spreads that the crude benchmark does not capture — so this flags and measures, and stops there.

Do pump prices rise faster than they fall?

Half of a rise in crude reaches the pump in about 2.8 weeks; half of a fall in about 3.0 weeks. On this measure rises and falls reach the pump at much the same speed. In the week of the move itself about 10% of a rise shows up at the pump against about 8% of a fall. Over the full 8-week window a 10p move in crude is associated with about 13p at the pump on the way up and about 11p on the way down. Both exceed 10p because refining and retail costs tend to move with crude as well, so this is the response to a crude move, not the crude cost alone.

Estimated from 1153 weeks of data with an eight-week lag structure, fitting weekly changes in the pump price to the positive and negative parts of weekly changes in crude. The fit explains 61% of the week-to-week variation. This is one specification on national weekly averages, not a finding about any particular retailer.

How is this worked out?

Crude is Brent converted at that week’s exchange rate: dollars per barrel divided by 158.987 litres, divided by the pound in dollars, times 100. VAT is the share of the pump price the rate implies, duty is the rate DESNZ publishes for that week, and the margin is whatever is left: refining, shipping, storage, distribution and the forecourt. It is a residual, so anything the Brent benchmark misses, such as biofuel content or refinery timing, lands in it.

The full method, including the pass-through regression, is on the methodology page.

What would a given oil price mean at the pump?

A barrel is 158.987 litres. Move the sliders to see what a given oil price, exchange rate and margin would mean at the pump. The starting values are the latest actual figures.