The true price of gas
Are you getting fleeced at the pump? Hard to say. Social, economic and political factors all play a role determining the connection between crude oil and gasoline
Photo: Ashley Jouhar, Cultura, Getty Images
Every time the price of gasoline goes for a ride, so do we. We whine, we kvetch, we tell TV reporters who interview us while we fill up that we're going to take transit more and downsize our rides.
But mostly we just take it. What gets us really steamed, though, is when the price of crude takes a dive and somehow prices at the pump seem to take their time going down.
When fuel prices jumped last May to a two-year high of about $1.35 a litre in the wake of the Arab Spring uprisings, the federal government called for parliamentary hearings. Oil industry officials dutifully showed up for a grilling and promised Canadians weren't being screwed at the pumps.
The hearings produced nothing, except maybe a reaffirmation among many Canadians that the entire business is a racket.
"The number of people I've been able to convince is few and far between," admits Ted Stoner, vice-president of the Calgary-based Canadian Petroleum Products Institute.
The price of West Texas Intermediate crude oil, one of the market benchmarks, reached US$110.40 a barrel last April before dropping to US$85.62 in the fall. It's been bouncing around but the trend seems to be downward.
According to GasBuddy.com, which uses reports from thousands of consumers to track gasoline prices, the average Canadian pump price on May 12, as Ottawa was announcing hearings, was almost $1.35 a litre. But in late September, despite declining crude prices, the average pump price was still more than $1.26.
Perhaps more intriguing, the Canadian average pump price in June of 2008, just before the global banking crisis cut the legs from under the economy, was just above $1.40 a litre. At the time, West Texas Intermediate crude was heading towards a July peak of US$145.66 a barrel. Gas prices began heading slowly down below a buck a litre to 73 cents in January 2009, a month after the WTI benchmark hit US$30 a barrel.
The oil industry never tires of telling us the price of crude is not the only factor in setting gas prices swinging. But consumers remain cynical.
"When you see swings like that, yes it does have an influence on the retail price but more of an influence will be the local market conditions and the competitiveness," says Stoner.
GasBuddy co-founder Jason Toews says gasoline and oil prices do roughly correlate but a lot of things can change that gap.
"In the summer months it's typical for there to be a disconnect between crude oil and gasoline," he says, referring to Canadians' penchant for taking motorized vacations.
A 1967 Shelby GT500 Super Snake sold for $1.3 million. Do you think classic cars were made better than modern rides?
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- Yes, the quality of cars from the 1960s and '70s is the best
- No, modern technology makes cars better today
- Maybe, it's hard to say since most Canadians get a new car every 10 years