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Crude down. Pump Prices Up?

It's Mid-January...Time For The Exciting Annual Review

Waiting line_butterflysha I may be one of the few people who eagerly await the January release of the Annual Review by Fuel Focus, but it's just such a worthwhile read.  I don't camp out on the steps at Natural Resources Canada dressed like my favourite gas pump eagerly awaiting the first copy or anything like that...they thankfully put it on their website where I can stay warm, cozy and read it.

So, the research is in on one of the most interesting years ever recorded in the commodity world. Was I telling the truth throughout the year, or were the critics in the comment section right?  Let me slip into my gas pump costume and share some highlights.

No surprise here, 2008 was full of record highs and lows not seen in years.

  • Canadian retail gasoline prices in 2008 averaged $1.14 per litre, an increase of 12 cents per litre compared to $1.02 per litre in 2007. Gasoline prices rose in the first half of the year to $1.40 per litre by July—the highest weekly average price ever recorded—and ended at 72 cents per litre—its lowest level since January 6, 2004.

Throughout the ups and downs I offered a number of thoughts and explanations to explain the many changes that were occuring.  Let's see how I fared.

Crude oil prices changes throughout the year were reflected in the pump price. 

Many people still believe the relationship between crude oil is all "quick up and slow down", but the data shows that's just not the case.  The pretty lines tell the story.

 2008 final crude and gas prices 

While the high Canadian dollar shielded Canadians from rising crude prices in the early part of the year, the dollars drop in the later half of the year leveled the slide when crude was dropping dramtically.

Let's see what the data says......

  • While the appreciation of the Canadian dollar shielded Canadian consumers from the high gasoline prices late last year and early this spring, the subsequent depreciation of the Canadian dollar against the American dollar reduced the full impact of the softening of crude oil prices on petroleum product prices to consumers.

There are often many reasons why crude oil prices go up and down.  To some, the varied reasons are just a constantly changing list of excuses.  But in reality, it's a global commodity and can be influenced by many things beyond our borders...and our control. 

  • The folks at Fuel Focus walk through some of the big influencers in 2008...Downturn in the world economy, Oil Commodity Trading Activities, U.S. dollar, Geopolitical events, OPEC, Weather-related activities and U.S. Inventories. 

Forecasting oil and gas prices makes for good headlines, but don't take them too seriously.

Fuel Focus talks about the predictions made in 2008 and offers some words of caution

  • It is important to remember that when looking at these forecasts they represented what could happen in fairly specific scenarios. In fact, only six months ago, many analysts were predicting oil prices would average over $US200 per barrel for 2009—with the downturn in the economy, prices ended the year at its lowest level since early 2004.

So once again, thanks to the staff at Fuel Focus.  I encourage anyone interested in gas prices to read the full report.  It's not long and there's plenty of detail if you want to dig into it.  Keep it up and I may be pulling out my sleeping bag for next year's edition.

Photo Credit: ButterflySha

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