Petrol At Nine Month High - Inflation Next Month 3.1 ?

[crash 2005]

http://news.bbc.co.uk/1/hi/business/6669399.stm

The average price of a litre of unleaded petrol in the UK has risen above 96 pence for the first time since August last year.

wonder what this will do for inflation and mervyn king who I believe quoted that oil prices were going to fall further?

[crash2006]

http://news.bbc.co.uk/1/hi/business/6669399.stm

wonder what this will do for inflation and mervyn king who I believe quoted that oil prices were going to fall further?

lol you got there before me, yes cpi will seem to go up again, and energy prices are heading up aswell.

[Wait & See]

Yep,

Have noticed petrol prices creeping up over the last few weeks.

Here we go - IR increase in June is a good bet.

[OurDayWillCome]

And then there's the fuel duty increase coming up in October.

Clown Brown would love to postpone it but he needs the money!

[Slumpmonkey Returns]

Please forgive my naivety but are petrol prices actually included in the BoE's comedy CPI figures?

[crash2006]

Please forgive my naivety but are petrol prices actually included in the BoE's comedy CPI figures?

we'll the effect it has on other things, if oil rises then transport cost may rise which mean food stuffs may rise.

http://business.timesonline.co.uk/tol/busi...icle1786349.ece

anyway i think we may have seen the last of energy price drops maybe on or two more, but youll see an increase over the next few months.

[jackalope]

Where's crash2007? I'd be interested in his views on this.

[Guest d23]

lol you got there before me, yes cpi will seem to go up again, and energy prices are heading up aswell.

correct me if i'm wrong but i thought the price doesn't actually have to go down to brin down CPI, it just has to rise at a slower rate than last year

[tara747]

This is great!

Watch that CPI goooooooooooooooooo

[the end is a bit nigher]

correct me if i'm wrong but i thought the price doesn't actually have to go down to brin down CPI, it just has to rise at a slower rate than last year

absolutely correct - however, the fall to $50 a barrel earlier in the year will have fed into some figures back then and will have contributed to the 2.8% we have at present - oil back at 70$ will assist in bringing CPI up again

[Casual Observer]

Please forgive my naivety but are petrol prices actually included in the BoE's comedy CPI figures?

Yes they are.

(Why describe them as comedy figures if you don't know what they measure?)

[Leonard Hatred]

(Why describe them as comedy figures if you don't know what they measure?)

Because even without knowing exactly what's in them, you can be sure that they don't represent the actual cost of living.

[the end is a bit nigher]

Yes they are.

(Why describe them as comedy figures if you don't know what they measure?)

probably because they have been slated by the MPC and have little relation to the actual increase in cost of living as suffered by the majority of the population

[crash2006]

correct me if i'm wrong but i thought the price doesn't actually have to go down to brin down CPI, it just has to rise at a slower rate than last year

either the price remainds the same or drops, from the previous year, so a price drop in energy compared to last year, does affect cpi but as its 3.1 its drop back, however if it rises again it feeds the cpi so its actually good that the energy priced dropped a bit, so when it rises later on again it hits teh cpi again.

Its like a wave if the wave keeps up long enough to feed another inflation wave then no matter if the energy price drop inflation gets a hold. once the waves start to over lap each other then inflation tend to get out of control

Edited May 18, 2007 by crash2006

[OzzMosiz]

correct me if i'm wrong but i thought the price doesn't actually have to go down to brin down CPI, it just has to rise at a slower rate than last year

Yep, everything can go up 2000% one year, be ignored and then the next if it goes up just 200%, then it wouldn't feed into CPI

[marko]

Careful how much you celebrate this news guys...it represents the beginning of a resource-scarce future, with wars as a result. Every summer from now on we will see oil prices hitting new records as a combination of increasing global demand and supply shocks come into play.

Unless we get our collective act together rapidly, the result is going to be a slow erosion of our standard of living (might be better for the planet though at least). Unless we are very clever in the years ahead, we are all going to be getting poorer as this thing bites...regardless of house prices.

Gleefully rubbing our hands whilst thinking about the impact of expensive oil on inflation figures is one thing: maintaining our standard of living is another!

[OzzMosiz]

Careful how much you celebrate this news guys...it represents the beginning of a resource-scarce future, with wars as a result. Every summer from now on we will see oil prices hitting new records as a combination of increasing global demand and supply shocks come into play.

Unless we get our collective act together rapidly, the result is going to be a slow erosion of our standard of living (might be better for the planet though at least). Unless we are very clever in the years ahead, we are all going to be getting poorer as this thing bites...regardless of house prices.

Gleefully rubbing our hands whilst thinking about the impact of expensive oil on inflation figures is one thing: maintaining our standard of living is another!

I'd rather get poorer after sorting a permanent roof over my head, and not before!!!

[Levy process]

Careful how much you celebrate this news guys...it represents the beginning of a resource-scarce future, with wars as a result. Every summer from now on we will see oil prices hitting new records as a combination of increasing global demand and supply shocks come into play.

Unless we get our collective act together rapidly, the result is going to be a slow erosion of our standard of living (might be better for the planet though at least). Unless we are very clever in the years ahead, we are all going to be getting poorer as this thing bites...regardless of house prices.

Gleefully rubbing our hands whilst thinking about the impact of expensive oil on inflation figures is one thing: maintaining our standard of living is another!

What about the huge tax on petrol in European countries? In my opinion there's a lot of slack in the system if you allow for tax reductions. So the state would have to be reduced in size as the tax revenues fall, but that would be no bad thing.

[Wait & See]

I'd rather get poorer after sorting a permanent roof over my head, and not before!!!

The man's (woman's) got a point. Once a roof over our head is sorted out, them we may worry about our standard of living.

Without shelter, there is no standard of living.

[Guest grumpy-old-man]

http://news.bbc.co.uk/1/hi/business/6669399.stm

wonder what this will do for inflation and mervyn king who I believe quoted that oil prices were going to fall further?

just as predicted by many on here.

when oil goes up, nearly everything does as well.

[tara747]

Yes they are.

(Why describe them as comedy figures if you don't know what they measure?)

Because the CPI basket changes every five minutes.

[Guest grumpy-old-man]

Careful how much you celebrate this news guys...it represents the beginning of a resource-scarce future, with wars as a result. Every summer from now on we will see oil prices hitting new records as a combination of increasing global demand and supply shocks come into play.

Unless we get our collective act together rapidly, the result is going to be a slow erosion of our standard of living (might be better for the planet though at least). Unless we are very clever in the years ahead, we are all going to be getting poorer as this thing bites...regardless of house prices.

Gleefully rubbing our hands whilst thinking about the impact of expensive oil on inflation figures is one thing: maintaining our standard of living is another!

sobering post marko, but it's all out of our hands anyway isn't it ? it is what they would wish for.

[Slumpmonkey Returns]

Careful how much you celebrate this news guys...it represents the beginning of a resource-scarce future, with wars as a result. Every summer from now on we will see oil prices hitting new records as a combination of increasing global demand and supply shocks come into play.

Unless we get our collective act together rapidly, the result is going to be a slow erosion of our standard of living (might be better for the planet though at least). Unless we are very clever in the years ahead, we are all going to be getting poorer as this thing bites...regardless of house prices.

Gleefully rubbing our hands whilst thinking about the impact of expensive oil on inflation figures is one thing: maintaining our standard of living is another!

Or I guess man as a species could decide that the time is right to wean ourselves of this finite resource and invest in infinite resources or resources that do less damge to the environment.

[skhudy]

absolutely correct - however, the fall to $50 a barrel earlier in the year will have fed into some figures back then and will have contributed to the 2.8% we have at present - oil back at 70$ will assist in bringing CPI up again

The could always change the weighting

Aside from that oil is a problem for everyone. The US / UK haven't even tried picking a fight with anyone recently and look at the prices going up

Someone needs to invent a water powered car (nuclear fission)

[zceb90]

...yes cpi will seem to go up again, and energy prices are heading up aswell.

There are at least 2 factors at work here, namely shortage of refined product especially in US and an increasing tightness in crude supply, in particular of light sweet crude (LSC) which is most suitable as feedstock for transportation fuel. The US (which with just over 4% of the world's population consumes 26% of the world's gasoline) is currently running about 1.5m bbls/day short on refining capacity due in part to a backlog of maintenance and also due to rapid demand growth. As a result US is bidding for cargoes on the spot market thus forcing the price up elsewhere.

There's a further factor at work here which I might describe as 'the elephant in the room', namely that of ongoing depletion of mature oilfields against a background of fast rising demand in India, China etc. Output in N Sea is in steep decline and there are also serious supply disruptions in Nigeria - both of these areas provide LSC and thus the loss of output in those areas has a disproportionate impact on gasoline prices. Not least we now appear to be on the verge of precipitous output declines in the world's largest oilfield which is again the source of large volumes of LSC (note this is a superbly researched report but is a long read): Depletion Levels in Ghawar .

The issue of depletion preventing supply to grow in line with demand growth is unlikely to be temporary - the question we should be asking is not how much can we grow supply but by how much is supply going to decline year on year. Unless there is a sudden halt to growth, especially in China (reported to be adding 0.5m vehicles per month to their roads) drivers in OECD nations are facing reductions in available fuel per capita each year.

Based on the reports I've been reading recently by extremely well respected petroleum analysts I would plan on petrol prices reaching £1.50 per litre within 5 years. That's not all - if this recent report is correct for each 10 litres drivers might require in 2020 only 5.5 litres will be pumped at the filling station: Ali Samsam Bahktiari and peak oil .

If Ali's forecast is correct (or only even half correct) it would be prudent to live near one's workplace or at least on a good public transit route as future high fuel prices and supply constraints could well make the current culture of mass commuting by private vehicles (with average 80% single occupancy at peak hours) unsustainable. Houses in areas of 'sprawl' ill suited to public transport would experience quite a price correction in the event of a fuel crisis.