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Are we there yet? Lower gas prices could mean more summer road trips.

Gas at 3 cents a litre? An interesting look at subsidized gas prices.

It doesn't seem to matter where you are in the world - the price of fuel is a hot topic of debate.  Even when it's as low as 3 cents a litre (12 cents a gallon).  The Associated Press ran a story this weekend  highlighting how gasoline is subsidized in a number of countries.  Those of us in Canada will no doubt read the following sentence with our eyes wide and our tongues wagging:

"To spread wealth and buy support, many oil producing nations subsidize fuel for domestic consumption. Gasoline sells for as little as 39 cents a gallon (10 cents a liter) in Iran, 60 cents a gallon (16 cents a liter) in Saudi Arabia, and $1.52 a gallon (40 cents a liter) in Iraq, where prices were ratcheted up following the U.S. invasion."

While it's likely some will circulate this story and ask "Why not here?", the entire article by AP reporter Rachel Jones is well done and worth a read.     

Comments

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Nicholas Belcourt

gas prices are ridiculous in canada.... petro canada overprices everything and even though im telling the truth the "author" is not going to allow this aritcle to be put on the web cause its the truth so im going to go to facebook and make a group against petro canada so you guys get less money in your next fiscal year. and no blog is ever moderated anymore unless your a communist.

Jon Hamilton

Hey Nicholas

There are many good reasons why gas prices are what they are in Canada. And when you take out the subsidized countries, our pump prices are among the lowest in the world. Some countries also tax their gasoline a lot less. It's therefore important to look at all the factors.

As for moderating comments, it's not uncommon for corporate blogs. Many have decided to stop moderating. I applaud those who have done it and we may get there some day. For me, it's more a personal choice. My kids check out the blog from time to time and I don't want them seeing foul language before I get a chance to pull it down or edit out the bad words. I've only had to do that on a few occasions, but it happens enough that I'm not prepared to open up this space.

That doesn't make me a communist. It makes me a Dad.

Keep the comments coming. I know I have a few on my previous post to get to. Haven't had much time lately.

Jon

F. Toro

The part that is missing from the "real cost of gas" is the profit made by the crude producers. No one in the petroleum supply chain works for free or gives the oil away. It costs on average less than $10.oo to extract one barrel of oil from the ground at the major producing countries- the middle east, Venezuela, Mexico. Yet it sells at upwards of $40.00 a barrel, and guess who pays for that. We do. So if the price of oil were a bit closer to the cost of oil, say only double, then there would be no excuse for the gas refiners and distributors to keep prices at the current level. The fact is that negative price variances, that is when the costs go down, the price does not track. By hook or by crook the suppliers find one excuse or another to keep the price up. A great example is when we switched from gallons to litres. It was a perfect opportunity to obfuscate the facts and hide a hefty hike in the confusion. The same when the price of oil shot up. The price of gas went up immediately even though the gas at the pump was produced with cheaper oil. The excuse? we need to finance the more expensive oil coming up. When the price of crude went down, the price of gas stayed up because "it was produced with more expensive oil". Except that it had already been paid for by the prices being kept high before. That is double dipping in most worlds.
Lte's deal in facts, but let's put ALL the facts on the table. The "true cost of gas" chart only presents gas-company friendly facts, not all of them.

Henry Schill

I always wondered, what is the procedure for the price change at the pumps? Do the pump owners or employees get a phone call from somewhere to raise or lower the price, or is it done by themselves without any instructions?
If there is a call or instruction for the change, where is it coming from?
It would make sense to change the price when the tank is refilled, since the price of the gas probably billed when it is delivered. Otherwise it appears to be very complicted for the retailer to follow the profit/loss issues if the gas price changes a few times while he is selling the old batch which he has already paid. Why is it possible to have 7-9 cents price difference in between gas stations on the same day within 15km or less. If the price is really controlled by supply and demand, what would happen if for example we all would fill our tanks only half for a week or at least for a few days? Would the decline of the demand have any affect on the retail pricing?

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