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Consumers worldwide have watched the cost of petroleum (motor fuels) continue to fluctuate throughout the
year. This raises the question, "Why do petrol prices rise and fall?"
In the long term, the greatest single factor influencing petroleum prices is the cost of crude oil. However,
marketplace forces of supply, demand and competition can have a significant effect on the price of petroleum in
the short term.
Taxation
Taxes takes up a significant component of the price in a litre of fuel, but it varies from product to product, and
country to country. Tax rates can be as high as almost half the cost of fuel in countries that Caltex operates in.
Country
Cambodia
Hong Kong
New Zealand
Philippines
Singapore
Thailand
significant impact on petroleum prices, and explain some of the variations in petroleum prices across different
markets.
In any market situation, supply and demand imbalances can affect prices in the short term. Supply shortages
typically cause upward price pressure, and can result from an unplanned refinery outage, pipeline problems, or
an unforeseen increase in demand. Conversely, length of supply, where supply exceeds demand, can result in
downward price pressure.
Other factors affecting pricing include foreign exchange, geographic location and local competition.
Competition, reflected by the number of choices in the market place, can also affect pricing. Almost everyone has
experienced the difference in petroleum prices between a lone station on a lengthy interstate and in town, where
many intersections may have two or three service stations to choose from.
Generally, price adjustments in the market affect short-term supply-demand imbalances and bring supply and
demand back into balance. Whether in a situation of supply tightness or length, price will eventually bring the
supply-demand balance into equilibrium by attracting additional supply or influencing demand.
The Future
No one can say with certainty what will happen in the future with crude oil and petroleum prices. Caltex, as a
Chevron brand, supports a comprehensive national energy policy that would address both conservation
(reducing demand) and increasing the supply of crude oil and refined products. This includes streamlined
permitting for petroleum infrastructure, as well as increasing domestic crude oil production in an environmentally
responsible manner. Caltex is committed to taking all appropriate steps to supply our customers reliably and
safely with the motor fuel products they want.
Prices for petrol are determined by global supply and demand and the market decides the price. Caltex will
continue to monitor the situation closely and will adjust the prices accordingly in the direction of the market.
Caltex is aware of customers' concerns on price sensitivity and we will always strive to price products
competitively.