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March 14, 2008


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Stacey Upson

So, with oil dropping to under $100 today (for now anyways)? When oil went from $99 to $110, gas jumped 3 cents. Now that oil has gone down, is gas going to go down just a fast? I tend to think not. However, if it goes down within the next two days, I will gladly post on here again that I was wrong.

Jack Lance

Can you explain to me then, when tracking the data on the wholesale market, price increases at the pump have been adjusted within 24-36 hours, while price decreases in the cost of crude, have not been anywhere near as fast to respond. In fact, sometimes, it does not decrease at all! I am sure now, you will fall onto the argument of supply and demand. That whole .06 % increase over last year for demand. Don't forget to divide that by 12 for your monthly increase fact.

I support the oil industry, in most cases, however, there are times the oil and gas retailer are taking Canadians for a ride.

Further, when I convert the CAD to USD, the currency that oil is sold in, Canadians have not received their fair share? The retail price, adjusted, is about 2- 3c higher than what it should be with an adjusted dollar!


Great post. With prices on the raise we need to look at different fuel sources or better fuel eff.


Jon Hamilton


Thanks for your post. Sorry for not replying sooner. It's been a busy Easter weekend. I'll run the numbers this week to check what happened. Of course, the price at the pump is influenced by a number of other factors, so it's not always exact, but it's suprisingly close. The Canadian dollar dropped with oil this week, which reduces the purchasing power of Canadian oil companies as the markets are in US dollars. That puts upwards pressure on the price too and may have negated some of the impact of the drop in crude prices.



Jon Hamilton


Thanks for your comment. I'll run the numbers this week to see what was at play. There is rarely a simple answer, but I'll report back. You're right on demand for gasoline in North America as it's a mature market. The demand pressure is coming more from the countries like China and India. My last post also dealt with how the impact of the fundamentals - like supply and demand - is becoming more difficult to track.

As for the dollar benefit, the Federal Government has studied the benefit to consumers. The details can be found here:






I don't think you will get many people disputing that the gas prices need to reflect the replacement cost of the stock - hence the link to current prices

It's as others have stated - the prevailing persistent impression that prices seem to jump up much quicker on whatever news is used to justify the increase - and take longer to drift down.

You have control over your corporate store pricing
but not over your franchisees - but that still does not explain why petro profits hit record highs in seeming lockstep with crude.

Nor does it really address another question as to why we should expect gasoline companies to keep lower prices for consumers. Its a "competitive oligopoly" - so if we believe in market forces - we aren't paying an undue market premium - right Jon.

But this is gasoline and nothing seems as it is.

Earlier there was a post regarding the Quebec proposal (and Australian program) requiring retailers to post their price increases a day in advance - why would Petro's object to that? If that's the will of the people - let them eat cake.

There has also been the chart that showed the historic trend line of major world events and the corresponding increase in price -
that chart - shows a significant disconnect between cause/effect comparing then to now.

Those are the things people (myself included) want/need to understand. If there are factors/forces beyond your control - like OPEC taking a price premium, displacement of demand into China/India - fine - lets quantify that and move on.

but its the incessant arm chair quarterbacks who proclaim one day the cause to be this and the next day contradict themselves that drives everyone into the deep end.

If speculators are artificially driving up the cost of crude - then lets have the market control that - by requiring larger contracts, longer dated contracts....

Solutions, leadership, partnership that's what is required.

that why I keep urging you/oil companies to take a proactive stance in helping us poor peons better understand and better manage our expenditures on fuel/energy - being part of the solution.

To your credit Jon

you are the pointed end of the stick - that your inductry bretherin have not chosen to follow and expose themselves to these tough questions
So KUDOS to you and PetroCanada - for creating this channel of discussion and yes at times rage.


Joe Feyereisen

I disagree with everyone's discussion on oil prices affecting gas prices. Why do the governments allow gas to be treated differently than other commodity staples? The market trades on future prices, and just because something may cost less or more in the past, it shouldn't have an immediate effect on consumer retail pricing. If we think a freeze will hit the orange market, orange futures go up, but the price at the grocery store doesn't change until their next shipment arrives.

If it is indeed based on market prices, then markets are closed on weekends, nights, and holidays. So why do prices at the stations change during those times?

The business of gasoline should be based on the same economic business principles of inventory purchasing. Separate the business of futures and the business of distribution.

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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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