Fuel prices can change regularly, sometimes even from one day to the next. That’s because the price you pay is closely linked to wholesale fuel markets, which are influenced by factors such as global supply and demand, currency exchange rates, refinery activity and international events.
At NWF Fuels, we typically hold up to two days’ worth of fuel stock at our depots and replenish supplies frequently to ensure we can continue meeting customer demand. Products such as diesel, gas oil and kerosene are purchased at the wholesale market price available when replacement stock is bought. In simple terms, fuel is traded in a live market, and prices move as market conditions change.
How Are Fuel Prices Calculated?
Like many commodities, fuel prices are based on the cost of purchasing replacement stock. Because we buy fuel regularly, the cost of replacing fuel sold today may be different from the cost of replacing it tomorrow. The price we quote includes:
- The current wholesale cost of the fuel
- Government duties and taxes
- The costs of safely storing, transporting and delivering the product
When wholesale fuel prices increase, our replacement costs rise too. This is why fuel prices can move over relatively short periods, and occasionally more than once in the same day.
Why Doesn’t Fuel Always Follow the Crude Oil Price?
While crude oil is an important factor, it’s only one part of the picture. Products such as diesel and kerosene are refined fuels with their own supply and demand dynamics. Their prices can also be affected by refinery output, product availability and currency fluctuations. This means that even when the headline crude oil price falls, it doesn’t always result in an immediate or equivalent reduction in the price of every fuel product.
From Wholesale Market to Customer Price
Because fuel distributors need to replenish stocks regularly, changes in wholesale markets can feed through to customer prices relatively quickly. The Competition and Markets Authority’s recent study of the domestic heating oil market found that the sharp price increases it examined largely reflected higher wholesale costs, rather than excessive supplier profits.
What Does This Mean for Customers?
Fuel is a market-priced product, and our prices reflect the cost of replacing stock at current wholesale market rates. As those costs change, the prices of diesel, gas oil, kerosene and other fuel products may change too. When you buy bulk fuel or home heating oil from NWF Fuels, the price you’re quoted reflects both the current market value of the fuel and the costs involved in storing, handling and delivering it safely to your property. Our aim is always to provide a fair, transparent price based on the market conditions at the time of purchase, while continuing to deliver the reliable service our customers expect.
Key Takeaway
Fuel prices change because the cost of replacing fuel changes. The price you pay reflects current wholesale market conditions, together with the costs of safely delivering fuel to you.