Forum

With over 100 years of experience in the fuel industry, we believe there is no question or problem that Portland cannot answer or help you solve. We want to hear your questions and issues with regards fuel buying, fuel quality, fuel consumption, petrol forecourts, grades of fuel, refining etc, etc, etc. The list really is endless and we would like you the fuel user to test us so we can help you!

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Read our forum questions below:

April 11, 2012 I've just got back from the continent and noticed that diesel is much cheaper than in the UK. Also it was much cheaper than the petrol for sale there, whereas in the UK, diesel is more expensive. Is the diesel different to the UK? Is that why it is cheaper?

No Monica, the diesel in the UK and the EU are identical, so don’t worry if you are thinking you have been filling your product with an inferior product. The difference in price between the UK and Europe comes from Government tax (duty). Unlike other European countries, Britain charges exactly the same duty (57.95 pence per litre) on both petrol and diesel, whereas European countries charge much less duty on diesel (the amounts vary from country to country, but is lower than petrol). The lower duty on diesel is largely to support the European haulage industry, so it is a significant bug-bear for the UK haulage community that no such help is offered to our truckers.

In terms of the difference between petrol and diesel prices, this again comes down to duty. The base (Rotterdam) price for diesel is actually more expensive than petrol across Europe, but once the European countries add the higher duty onto petrol, the higher price manifests itself. In the UK where petrol and diesel duty rates are the same, the higher base price for diesel becomes the main factor, meaning it is more expensive.

Monica from Rochdale got in touch with this question

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March 7, 2012 When tankers make deliveries to petrol stations, are they carrying both petrol and diesel or do they have to make separate deliveries in order to keep the 2 grades apart?

Tankers that are designated for petrol station deliveries actually have multiple compartments that allow different portions of petrol and diesel to be delivered. Take a look at the top of a tanker and you will see a set of evenly spaced numbers that designate each compartment. Most tankers have 6 compartments (so you will see 1-6), that are split by steel “baffles” to keep the petrol and diesel apart. In order to ensure that the tankers weight is evenly balanced, the No 1 compartment (at the front) is typically about 5,000 litres capacity. As the compartments move to the middle, the volumes increase to 7,500 litres and then revert back to 5,000 litres at the back of the tanker.

This flexibility allows any combination of fuel delivery, depending on the demand at the forecourt. So for example, if the forecourt needed 25,000 litres of diesel / 15,000 litres of petrol or 10,000 litres of diesel / 30,000 litres of petrol or indeed any combination of volume, they can all be accommodated on one tanker and with one delivery. It is important to remember that there are weight limits on tankers, so that depending on the volumes carried, not all compartments will necessarily be full. The petrol carrying capacity of a tanker is circa 42,000 litres, whilst diesel (because it is heavier) is 36,000 litres.

Finally, there are some tankers that only ever carry one grade of fuel and therefore do not require separate compartments. In this case, the tanker must always be filled to maximum capacity to ensure that weights are balanced and quite literally, the product isnt sloshing around as it goes around corners. A good example of a single compartment tanker would be for jet fuel deliveries to airports.

This month’s question is from Eddie in the Algarve (very nice too)

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February 6, 2012 Hi there. I take home heating oil to heat my house and I have noticed that the invoice refers to 28s Burning Oil. What does this mean?

Thanks for the question Fergus. “28s Burning Oil” is the old / traditional name for home heating oil. It is actually exactly the same grade of fuel as aviation turbine fuel (Jet Fuel), ie, the stuff that goes into aeroplanes! In fact, the only difference between what jumbo jets use and what goes into your boiler at home, is that the latter has a pale yellow dye, to identify it as domestic / non-transportation use only.

The “28s” (28 seconds) term refers to the fantastically archaic test that was historically used to measure the viscosity of fuel products. Viscosity is essentially the pouring characteristics of liquid fuel – “pourability” would be a better term, but we dont think its a word! Anyhow, using a Redwood Viscometer, the fuel is poured through a narrow hole (less than 3mm in diameter). The time it takes 50ml to pour through the hole is the “second” measurement. So Kerosene is a 28 second fluid, whereas the slightly heavier Gasoil (Red Diesel) is sometimes called “35 second oil”, because it takes 7 seconds longer than Kerosene to flow through the same hole.

That such tests were ever invented boggles the mind, but we assume people just had more time in those days…

This question comes from Fergus in Ballymena, NI

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January 18, 2012 How is the pre-tax diesel pence per litre price calculated?

Wotcha John, roll out the barrel, how’s ya father, Shaaaaat uppp and the only way is Essex. There – we’ve got all our Southend stereotypes out of the way in one sentence. How’s the Westcliff Casino BTW? Many happy memories…

This is a good question on how diesel is priced and a subject that probably causes more confusion amongst the general public than any other.

If we go from the top downwards and take the current forecourt price for diesel which is circa £1.40 per litre (or in pence per litre = 140ppl). From that, we have to deduct VAT, which is circa 20ppl. Then another Government tax has to be removed which is called duty (currently at 58ppl). This leaves us around 62ppl for diesel exclusive of tax. As the forecourt retailer will be looking for a gross profit of about 5ppl, this takes us down to circa 57ppl and this price is the European Wholesale Price. So shocking fact No 1, is that Government tax on diesel is one and a half times the actual value of the product!

The action now moves over to Antwerp – Rotterdam – Amsterdam (sometimes incorrectly abbreviated to “the Rotterdam Market”), where cargoes of diesel are traded daily. A cargo trade is defined as a sale from a refiner (or storage terminal) to a trader’s ship and the minimum volume for a cargo sale is typically 15ml (ie, 15,000,000 litres). Every day these cargo trades are recorded and published in US $. That figure is converted to pence per litre using the day’s exchange rate and that figure is the European Wholesale Price.

John from Southend asked this question

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December 22, 2011 What is the total amount of sales of Red Diesel (Gasoil) in the UK per annum?

Annual Red Diesel (Gasoil) sales in the UK amount to circa 5.5 million tonnes. That equates to 6,500,000,000 (6.5 billion) litres.

As an interesting aside to this question, many fuel consumers are unaware that Gasoil is in fact the same grade as normal Diesel – the only specification difference being the red dye that the taxman puts into Gasoil to show that it cannot be used for road transport. On the other hand the price difference between the 2 grades is vast. Duty on Diesel as we know is 57.95 pence per litre (ppl), whilst on Gasoil it is only 11.14 ppl. This makes for a tempting diesel alternative (ie, circa 45ppl cheaper) but don’t even think about it – HMRC (Her Majesty’s Revenue & Customs) fines for misuse of Gasoil are huge.

A straight-forward one from Philip in Newport, Shropshire

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December 6, 2011 In your response to my question about FOB and CIF, I noted that you said 'the CIF price is usually higher than the FOB price'

You need to come and work with us Michelle. You are really getting into the nitty-gritty on this one!

Logically you are right of course. How can a price that includes transport ever be lower than a price that doesn’t? If that was the case, transport would need to be a minus cost and whilst freight margins are tight, they are not that tight!

However, the premise above is working on a built up cost basis (ie, Product Cost + Transport Cost) and it does not take into account of demand factors. So for example, if every wholesale buyer in Europe wanted to pick up product ex-jetty (FOB) rather than have the product delivered (CIF), then the FOB price would go up. At the same time, the value of CIF product would go down.

This scenario might be a function of buyers in a particular week having their own (in-house) transport, thus doing away with the requirement for CIF (delivered-in) price quotations. Or perhaps the result of major overseas buyers, looking for product to pick up by ship for export outside of Europe.

All of that being said, it is still an extremely rare event for a FOB price to be equivalent to a CIF price, let alone above it.

Michelle from Hertford has got in back in touch with this supplementary question

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