Why does it cost more to buy higher octane premium gasoline?  That question pops up from time to time, but this week it got some extra attention from a prominent blogger (Steven D. Levitt of Freakomics fame), a well-known Toronto Star columnist (Ellen Roseman)and a few others.  So let me wade in and try and offer my two cents.   Or 10-12 cents.

This time last year we were fine-tuning this blog getting it ready for launch in September.   We hoped to learn from other companies who had already jumped into the blogosphere, but other than finding a few good examples - like Dell and GM - the cupboard was pretty bare.  So we created most of this humble site from scratch.  We learned a lot in the process, but thought there had to be a better way. 

I received a number of calls and emails last week from people expressing their concern (perhaps too soft a word) that pump prices had not dropped in lock-step with the price of crude oil.  As you begin to stare down another work week or prepare to head out on vacation, you may be thinking the same thing. So let me shed a bit of light on what's been going on.  The short answer is that, for the most part, gas prices dropped last week.  The long answer is a little more complicated.

This weekend, I’m heading out of Calgary for a wedding. I’m not doing the driving because a few of us have decided to carpool (I think I get fuel efficiency points for that). But I must confess that when I am behind the wheel, I have a bad habit of going over the speed limit.

I need to break that habit – or should I say brake? – because it’s dangerous. And as if safety isn’t a good enough reason, slowing down also has other perks. I recently read in the Globe and Mail that by driving 100 km/h instead of 120 km/h, your fuel consumption can drop by 20 percent. (Now that definitely earns fuel efficiency points.)

If you want to make gasoline, you need crude oil and a refinery.   It's therefore easy to jump to the conclusion that the price of the two rise and fall in unison.  While they have tracked eachother in the last few months, it's not always the case.  Gasoline and Crude Oil, while closely correlated, are two seperate commodities that can be influenced by different market factors.  When they head in different directions, the questions start coming fast and furious.  The folks at Fuel Focus have done a great job compiling a timeline of the major events over the last four years.