Why has the price of petrol gone down as oil prices fell but the price of gas not fallen by the same amount as international gas prices?
The oil market is truly global and the reference prices for oil revolve around the benchmark prices of Brent crude and West Texas Intermediate (WTI). Excluding taxes, the commodity part of the cost of a gallon of petrol or diesel is 90% raw material with refining and shipping accounting for the balance. Oil products such as petrol and diesel react fast to changes in crude prices because of the high share of crude oil in their production 1. This results in changes in the commodity (shown in green) part of the pump price, shown as cost in Figure 7 below, which in January 2016 were a quarter of the pump price.