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August 18, 2011

Comments

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Ron345

Can you explain why the price difference between regular octane and premium is much higher in Canada?

It's $0.20/gal in the US (aprox $.05/L) yet in Canada its from $0.11-15/L?


Pump Talk

Hi Ron,
Thanks for your question. The variance you see between Canada and the US will vary greatly by province and state. Local market conditions like size of market, overall demand and competitive price play a large role. Price differentials for high grades vary between markets in Canada and between brands and sites within the market just as they do in the US. In general, high grades cost more because they have more expensive blending components and in most cases, a higher concentration of additives. There are also additional infrastructure costs associated with storage, distribution and dispensing costs associated with high grades. These fixed costs are incurred in both Canada and the US markets but smaller volumes and greater distances from supply points in Canada can result in higher cents per litre costs. Variable rate taxes also add to the price of higher grades in Canada.
You can also check out the blog post: "Premium Plus - A High Octane Story" http://www.pumptalk.ca/2008/07/premium-plus.html

Ron345

Thanks for the response. However most of the above reasons apply to both the US and Canada.

The fixed costs/higher taxes divided by a smaller population/(volume) is a reasonable point and to generally explain higher prices in Canada than the US.

However it does NOT EXPLAIN why the difference is 200-300% higher. We certainly do not see other retail goods marked up 2-3x compared to US prices.


Furthermore in southern Ontario, the distance to suppliers is far shorter and population density is much higher, than in many locations in the USA, yet our price differential is still much higher. (I travel to the US extensively)

Also these same differentials were in place when the US dollar was worth $1.60 Cdn. If all else remained the same, there should have been a HUGE decrease in the differential on currency rates (and the corresponding drop in taxes) on cheaper input costs alone! It would be nice to see some of that decrease passed on to the consumers.

I certainly would consider buying premium in Canada if prices seemed more fair.

In the meantime I will continue buying premium only when visiting the US until the differential becomes more reasonable in Canada.

Ron

perry grondin

yes i would like to know why the pump prices at the petro station in emeryville ont are always higher than other outlets reg gas 3 to 5 centa a litre and the diesel 10 centa a litre i can't wait for this excuse ????????

Pump Talk

Hi Perry, thanks for your question. We do try to be as competitive as possible. We don't, on the other hand, have influence over the price that others in the marketplace may charge - whether it is an independent retailer or large corporate competitor.
- Pump Talk

Alan

In the past week or two the price for a barrel of oil dropped from 5 to 7 dollars a barrel yet our price per litre did not drop and if it does it is not proportional to the market prices and is not changed in atimely manner. When the price of a barrel rises we see the price per litre of gasoline rise the very next day. I realize that the Canadian dollar has lost some value and this effects the price per litre BUT when our dollar was higher than the US dollar it did not effect our price per litre for gasoline. Can you explain why the price per litre does not follow in a logical manner the changes to the price per barrel of oil. The discrepancy make me think that the Ontario customer is being taken advantage of. Please comment and explain the reason for such a difference.

Petro-Canada

Hi Alan, great question. The relationship between crude oil and gasoline prices is not always correlated. There are many factors that affect the price of gasoline along with crude oil, including local competition and taxes. Our article in May 2011 helps explains this: http://www.pumptalk.ca/2011/05/gas-prices-go-up-and-down-but-what-causes-this-and-how-are-prices-set-in-the-first-place.html. There is also an article on Gas Prices & Crude Oil that we have published, it is a little dated - but still holds true: http://www.pumptalk.ca/2008/07/post.html. Hope this helps.

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PumpTalk is a blog created by Petro-Canada, a Suncor business, to share information and engage in discussion about a number of topics, such as fuel efficiency and product responsibility. In our weekly posts, we discuss subjects that we believe are important and are of interest to drivers everywhere. Here you’ll find posts on gas prices, reducing fuel costs, sustainability, auto industry innovation, and vehicle safety and maintenance, as well as posts on climate change as it relates to the energy industry and our shared responsibility.

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