When talking about gas prices, I'm sometimes reminded of Goldilocks & the Three Bears. While Goldilocks was seeking basic food and shelter, she deemed almost everything she found to be too hot, too cold, too hard, too soft, etc. When she does find something she's happy with, it's fleeting...empty porridge bowl, broken chair, abrupt end to a nap...
The price of gasoline tends to fall into that same rut. Never quite right and happiness is usually fleeting. No, I'm not going to blame the bears. They've had to endure enough. When many factors combine to influence the price of a consumer good like gasoline, it's sometimes tough to understand if it's too hot, too cold, or just right.
As I've posted before, the final pump price for gasoline is influenced by many factors. For examples, look here and here. Yes, the price of crude oil is one of factors, but it's not the only. Crude oil is the main ingredient in the gasoline recipe, which makes it an important indicator of where prices are going. Think back to the dramatic drop in crude over the last 5 months and the effect it's had on the price you are paying to fill your tank. But it's not a relationship that always works in unison.
Recently, wholesale gas prices have been rising, causing the final retail price to also rise. Gasoline being a commodity, the wholesale price is largely determined by the markets and how they interpret the supply/demand balance. As a Canadian oil company, we're price takers.
Also important for Canadian oil companies is the value of our dollar compared to the US Greenback (dollar). Just as a trip to the outlet malls in the US costs you more when the dollar drops, so too does the purchasing power of those buying crude oil as it's priced in US dollars. In recent years the dollar didn't fluctuate much so it wasn't much of a factor. But just like everything else these days, it's faced some volatile times. In the last few weeks we've seen swings of several cents. When the Cdn dollar is high, like it was this time last year, we benefit with lower prices. When the loonie is struggling, like it is now, it puts upwards pressure on the price of gasoline. Natural Resources Canada has studied this relationship before.
So, while prices are much lower than they were just a few months ago, they are neither too hot or too cold. They are just right based on the many factors that influence the final selling price. For those who disagree with my Goldilocks approach, we all know what happened to her. And not in the "sanitized" modern version of the story.
Editor's Note: This post is to answer the comments I've been receiving on this topic. Sorry for the delay in responding.