A Few Key Questions Answered
Sunday Drive?

A Brief Conversation With Those Who Set the Price.

3006348550_3bb10dda55 As we approach another summer long weekend, I’m sure many of us are hoping for great weather and good times with family and friends.  It also means that the rumour mill is starting to churn again that we need to plan ahead and gas prices are going to go up.   I’ve watched long weekend pricing more carefully now for a number of years, and have seen that yes sometimes the prices do go up; but just as often as not they pretty much stay the same or even go down.

So, earlier this week I sat down with some of the folks in our retail pricing group to ask them directly about the myth that gas prices go up before every long weekend.   They were pretty clear that the factors they use to make pricing decisions before a long weekend are no different from any other weekend of the year, or any day of the week.

We’ve talked here on PumpTalk many times about the different factors that go into the price of gasoline:  the price of crude, commodity market prices for gasoline and local market forces.   Of the three, local market forces would include issues such as local demand for fuel, and how that can be something that can affect price.  It is also widely known that particularly in the summer months, during what we call the summer driving season, demand for fuel is higher.  Basic economics would suggest that higher demand can put pressure on a market to lead to higher prices… On the other hand, when it comes to retail fuels, that is only one factor that goes into pricing decisions.  So, even if demand goes up, like it often does in the summer, the other influences of crude oil and commodity costs can offset the upward pressure that is placed on pricing decisions from a demand point of view.

The bottom line I guess as we head into the long weekend, is that the folks in our pricing department come together on a daily basis and determine what they believe is an appropriate price for fuels on that day based on a number of factors.  Whether it is leading into the long weekend in August, or a frosty Friday in February their decisions are based on the same factors and strategies they use day-in and day-out and are not influenced by the fact that we are all looking forward to an extra day of sunshine for the family picnic.  Or, in my case, to swinging a fly on Bronte Creek for a few hours on Monday morning!

Photo Credit:  Valerie Everett

Comments

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Vince Landry

Odd that I filled up on Wednesday July 28th in Morinville and the price was $0.926. Another person at the pumps commented about knowing it was a Holiday Long Weekend because the previous day the price was $0.866...

Tyson Hamilton

I agree, very strange. Also strange how all the gas pumps in a given city have the same price, even with the competitors. Collusion? I think not says petro-canada, this just looks like collusion, in fact it is healthy competition - HA!

WAKE UP PEOPLE YOUR BEING SCREWED!

mark

I think that thay should lock the gas price in at 1.00. it can only go down the gov can cover the rest with the HST. it is [expletive deleted] that you can go down south and pay like .5cent to .10cent less then north something got to be done. this is pumptalk

G Kouri

The oil companies need a lesson in fair pricing practices. As a former retailer, we faced the return of sold product if prices changed within 30 days.
What is wrong with you. Take the lead and set your prices for a longer period. This will build customer loyalty. Instead you antagonize and alienate everyone. If PetroCanada held their price while others played the "Alienate your customer" game, imagine how much more business you would attract.
World prices do change on a dime but learn to deal with pricing without treating your customers as unwanted trespassers.
BTW, does anybody at P-C actually read these post?

Rob Holley

I fill up at the Canadian Tire gas bar in Owen Sound.
I noticed that the gas stations on either side of the road one day were TEN CENTS PER LITER cheaper!
I walked in and said "Can you explain to me why you are charging so much more than your competition?"
She explained to me that they are not in competition with them. They are in competition with UPI and Petro Canada.
That's right, they don't consider the two stations on either side of them competition, they "compete" with two UPI stations that are 1-2 kms away, and the Petro that is almost 1 km away.
The three of them it seems "compete" by collaborating together to agree to bump their prices up if another "competitor" does so.
We all know competition drives prices up right, so as you can imagine I left feeling that I had received a satisfactory answer to my question. No price fixing going on there!
I left the empty gas station and drove across the street to join in with about 20 other cars all looking to get cheaper gas.
I'm sure Canadian Tire didn't mind, after all, it's not like I went to one of their competitors.

Nick

Gas prices in Canada are ridiculously high. I am in vancouver paying 1.18 and it is hovering around this for last one month. This translates into $5 a gallon. Please someone tell me why is it so high despite the C$ raising 20% last year and international crude prices falling from $90 to around 75.

Chris Cronin

Gasoline and Auto Insurance is where Canadaian's (Ontarians) are getting screwed. We have no control over either of these things and we need both. There is no competition just price fixing and gauging.

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