Thursday, March 24, 2011

That petrol price cut

Driving through town this morning I noticed that all the petrol prices had decreased by exactly 1p in line with the budget rulings that came into effect. A cynical person could state it was done to prevent customers complaining about why it hadn't decreased by the 1p as promised. Why would a cynical person say that? Because it's a 1p cut in duty and remember the formula goes like this raw fuel+Duty+VAT.

To keep the figures simple - raw fuel at £1.00/litre + duty at 50p/litre add VAT.

Original £1.00 + £0.50 * 1.2 = £1.80
New £1.00+£.049 * 1.2 = £1.788

Given prices are stated to tenths of a penny the price should have decreased by 1.2p not 1p. Just saying.

[Just to push that point home. If the retailers only drop their prices by exactly a penny they're making 1p/5 litres sold more than they did yesterday before the 'cut']