MOTORISTS filling up at the pumps in Huddersfield probably give little thought to how the fuel they are buying finds its way to the forecourt.

But the petrol they need to make their daily trips to work has taken a lengthy journey of its own before ever reaching its destination – and that journey helps determine how much we pay at the pumps.

More than 300 firms are involved in the expensive process of blending, refining, distributing and marketing petroleum products.

They range from oil companies and supermarket chains to independent retail groups and independent retailers with a single site.

Each process adds costs for the oil companies who run the major refineries in the UK. They include exploration and refining costs, shipping costs and the cost of tankering fuel to the retailer.

Most of the petrol sold on the forecourts in Huddersfield started out as crude oil extracted from the slowly dwindling reserves under the North Sea.

That oil is transferred by ship and subsea pipeline to two major refineries on the Humber, although some refined product destined for the town’s filling stations also finds its way along the M62 from the Stanlow refinery at Ellesmere Port on Merseyside.

The two east coast refineries, standing almost back-to-back at Immingham, are run by Conoco Phillips and Total respectively, but tankers from all the major oil companies buy their product and fill up at these two sites under an exchange arrangement set up to reduce costs.

While the product is uniform, it is sold under a host of brand names – ranging from BP, Esso, Jet, Murco, Shell, Texaco and Total to the four big supermarket “players” of Asda, Morrisons, Sainsbury’s and Tesco.

Conoco Phillips’ Humber refinery processes up to 221m barrels of crude a day.

The company, which markets its fuel under the Jet brand, exports to European and world markets from the Humber site as well as transporting to inland customers by road, rail and pipeline.

The major factor in how prices rise or fall at the pumps is the wholesale price of crude oil – always sold in dollars regardless of whether it comes out of the ground in Texas or Saudi Arabia or from the bottom of the North Sea.

The price is expressed as the Brent price for North Sea oil and the West Texas price for all the rest.

Petrol prices in the UK have risen in recent weeks partly because sterling is weak against the dollar – as even oil companies extracting products from the North Sea rely on oil from other parts of the world.

Other factors influencing price include demand from major markets like the USA and China, production levels and seasonal demand for products such as heating oil.

In addition, 80% of the pump price in the UK goes to the Government in duty and VAT.

Demand for fuel remains massive. Figures from the UK Petrol Industries Association show that the market for transport fuels amounts to 53m tonnes a year – equivalent to about 66m litres of petrol and 70m litres of diesel a day.

As well as the retail market covering petrol filling stations, demand also comes from the transport industry, power generators, the armed forces, agriculture and the public sector.

Despite steady demand, the number of filling stations has fallen in the UK from 18,000 sites in 1990 to fewer than 10,000 at the end of 2007 as supermarkets have captured 40% of the retail market.

As a result selling petrol has become a high-volume, low margin business in which small retailers struggle to compete.

Soaring petrol prices fuel fresh calls for European investigation

MOTORING organisations are calling for an inquiry into soaring petrol prices.

But a Huddersfield retailer said diesel prices in particular could soon be falling again – as demand for heating oil declines and the recession reduces the volume of commercial traffic on Britain’s roads.

The AA has joined motoring groups across Europe in urging the European Union’s competition commissioner to investigate the increases, which have been running at more than one-and-a-half times the current inflation rate.

The AA said unleaded petrol had increased by 4.28p a litre since mid-January to stand at an average of 90.88 against 86.6 a month ago. Diesel had risen by 2p a litre, taking the cost to an average of £1.79.

The increase comes despite oil prices averaging 45 dollars a barrel against 68 dollars the last time petrol prices were at 90p a litre.

In Yorkshire, the average price of petrol has risen by 4.3% to 90.5p a litre while diesel is 2.1% more expensive at average of £1.2p.

Chris Stern, of Paddock-based C J Stern (Oils) Ltd, said prices in Huddersfield ranged from 88.9p to 91.9p a litre for unleaded and about 98.9p to 99.9p a litre for diesel.

He said the latest rise was partly due to the weakness of the pound against the dollar.

But he added: “I cannot see it going up much more in the immediate future.

“We will start to see diesel prices falling and the gap between diesel and unleaded will close even more.”

AA spokesman Paul Watters said: “Drivers who see recession, a collapsed oil price and falling inflation are irritated by pump prices that continue to rise at a rate they associate with the soaring prices last year.”