The cost of petrol and oil: How it breaks down

8 November 2011 Last updated at 00:00

By Richard Anderson and Damian Kahya Business reporters, BBC News

“We all know petrol costs a lot, but how many of us actually know why, and who profits from selling the stuff?

The cost of petrol and diesel can actually be broken down fairly precisely, and it’s immediately obvious who the primary beneficiary is: the government.

Well over half, in fact about 60%, of the £1.34 odd we pay for a litre of unleaded is fuel duty and VAT.

Less than 5% goes to the petrol retailer, in some cases more like 1%, which helps in part to explain why so many are struggling despite recent rises in fuel costs.

Next to tax, the single biggest component in the price of petrol is… well, the petrol itself, which accounts for about 30% of the overall cost.

For example, a bog standard barrel of oil fromSaudi Arabiacosts about $2-$3 to extract from the ground, whereas a barrel taken from tar sands in Albertacan cost more than $60.”

Looks like the taxpayers are subsidizing tar sands, doesn’t it?