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Oil prices at five-year low due to supply glut, so why isn't petrol cheaper?

Oil prices at five-year low due to supply glut, so why isn't petrol cheaper?
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As oil prices slipped further on Friday, the International Energy Agency (IEA) said they are set to go even lower.

Benchmark Brent crude was under $62 a barrel, having fallen close to nine percent just this week.

The last time it was that cheap was in July 2009 – five and a half years ago.

At the same time the IEA cut its outlook for demand growth next year.

The agency, which coordinates the energy policies of industrialised countries, said demand will increase by around 900,000 barrels per day (bpd), that is 230,000 bpd below its previous forecast and much lower than predicted supply capacity.

The Organisation of the Petroleum Exporting Countries (OPEC), which accounts for a third of world oil output, said it sees 2015 demand at the lowest in more than a decade.

So, why aren’t we, the public, seeing the benefits from the 45 percent drop in the price of crude oil since it hit a high above $115 a barrel in June?

Neil Atkinson, Head of Analysis with Lloyds List Intelligence, explained: “It takes time for the lower prices for crude, and more importantly the products which are produced by refining crude, to feed their way through into the market. Because refiners and holders of product stocks tend to run down their higher price inventories first, and replace those inventories with cheaper stock.”

In other words, the fuel being pumped now passed through refineries weeks or even months ago when crude cost more.

So lower prices are coming, if not by Christmas then certainly in the new year.

But in Europe taxes account for much of what we pay on the forecourt which limits the possible reductions.