Gas Prices that are so 2007
Gas Prices Are Up....I know.

Gas prices in unison? 1200 people help me explain.

Gas_foodEver thought that gas prices seem to move in unison?  Well, they don't.  But I'll tell you why it seems that way.  Because you and everyone else on the road have your eyes glued on the big price signs.  Don't believe me?  I have fresh new research from south of the border that rings true up here.

NACS, the Association for Convenience and Petroleum Retailing, just released it's second annual consumer study.   They asked 1200 Americans about gasoline prices and got some interesting answers.

Price is driving consumer behaviour more than ever, almost to the point of inconvenience.

A 2000 NACS consumer survey found that location was the main factor for consumers in selecting where they shop for gasoline. And in 2007, 66 percent of consumers said that price was the main factor. Today, price is more important that location by nearly a 5 to 1 margin.

Not only will most consumers shop based on price, nearly one in three will inconvenience themselves to save a penny a gallon. The average fill-up is in the 10- to nearly 12-gallon range, NACS estimates, meaning that consumers say they will significantly change their purchasing behavior to save roughly 10 cents on a $30 to $35 fill-up

And the extra time spent looking for a bargain may actually cost drivers more.

Assuming that the car gets a robust 30 miles per gallon at 45 miles per hour, this 20-minute roundtrip to save approximately 30 to 35 cents would consume a half-gallon of gasoline, or $1.50 when a gallon cost $3.00.

The study also found that most drivers had not dramatically changed their driving behaviour - walk more, drive less, take transit, switch, or at least consider switching to a a fuel efficient vehicle.

So what does this have to do with prices seemingly moving in unison?  Well, if you sold a product where 73% of your customers were driven by price and more than half would take a left hand turn across a busy street to save a few pennies, would you want your price to be higher than your competitors?   Nope.   If you sell gas, you look at the same big price signs your customers are scanning for the best price and you make sure you keep your prices competitive.  While you hope people will turn left across busy traffic to fill up at your site, the guy on the right is hoping for the same thing. 

Photo Credit:  amy_kearns


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Jason Franklin

Really, then why has Petro Canada and ALL other fuel companies recorded record profits every year for the last 4 years if they are not forcing the price up?

Jon Hamilton

Thanks Jason.

Crude oil prices went up again last year, averaging $72 US per barrel on world markets. Higher crude prices bring higher revenues and typically higher profits to those in the oil and gas business. For more detail, check out an earlier post titled "Gas Prices are like a three-layer sandwich"

Gasoline is basically refined crude oil, so the higher world prices have impacted the price at the pump, as the feedstock crude is purchased at those prices. In turn, the higher pump price have made consumers, like you and me, even more price sensitive, which keeps the pressure on to offer the lowest price possible.

If you are looking for proof as to how that competition may have helped you, just look at how quickly the rise in the loonie was reflected in the pump price - keeping prices lower through most of 2007.


miro slodki


its like I've said before
you need to be seen as part of the solution and not part of the problem

being proactive
helping people save money

your 2 cents/litre on the credit card helps meet part of that challenge - but there is more that you can do (beyond the Neighbourhood CStore project)

I know you can - believe in yourself.


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