Now that I’ve got my Christmas gift shopping finished, I can really concentrate on what I love about the holidays: catching up with family and friends (oh, and the cookies and the fruitcake (yeah, I’m one of those nerds who actually LIKES fruitcake)).
For some, including me, the holiday season means some extra driving. I head over to Vancouver Island to visit my family for a few days over the holidays and that trip always means an extra fill up or two. Which can add up on my already over-burdened credit card. I started to get a little cranky when thinking about it “Why do gas prices always go up during the holidays?!” but then I wondered if they really do. So, I thought (nerd alert!) “Time for some data mining!” Warning: charts ahead!
The Kent Group is an independent organization that collects and shares data on (among other things) petroleum pricing. They issue a quarterly report on crude, wholesale and retail pump prices in Canada (please note the website is in English but newsletter reports are available in English and French). I looked at their 4th Quarter report for 2017. According to their research, the average price at the pump for gasoline in Canada was lower in December than it was in November.
OK, so overall, the average Canadian price for a litre of fuel didn’t go up last year over the holidays. But what about earlier than last year? And what about in my specific location? We know gas prices vary from region to region, largely because of taxes; does my region’s holiday pricing hold consistent with the country’s?
The Kent Group collects daily pump prices from 70 cities across Canada (English only) and makes that data available on their website. They also provide tools to slice and dice the data. Using their timeline tool, I selected pump prices for the last 3 years (Nov 1, 2015 – Dec 12, 2018) in Vancouver and Victoria (note – I added the red dots to indicate the holiday season).
So, it looks like there are dips during the holiday season (the last 2 weeks of Dec for our purposes here). The Kent Group’s report from Q4 2017 mentions that historically the demand for gasoline goes down during this time of year, which often results in gasoline price drops. However, I wanted to drill down a little deeper. What happens in the month preceding and the month following the holidays? Conveniently, you can also download the raw data for any graph you create. So, I downloaded it and selected the data from Nov 1 thru Jan 31 for each year 2015-2018.
What conclusions can we draw? Gas prices may go down in the aggregate over the holidays per the Kent report, but not always consistently across every market (Vancouver seems to buck the national trend on a regular basis. Oh, Vancouver.). It’s important to be aware of YOUR market’s prices. You can download the Kent Group data for your area and see what trends occur there.
And just a quick reminder about the four key elements that influence the price of gas:
- The cost of crude oil, including factors that can impact its cost, such as: severe weather, supply and demand, inventory levels, the cost of production, and global crisis;
- Wholesale gasoline prices, which are influenced by factors such as: supply and demand, refinery maintenance, and weather;
- Refining and marketing costs: including the cost of refining crude oil into gasoline, and then transporting and distributing the gasoline to local stations;
- Taxes: each province has different fuel taxes. You can check the different tax levels at Natural Resources Canada.
Two of these factors (the cost of crude and wholesale gasoline prices) are commodities, meaning the value that traders place on these commodities changes based on market conditions. While you would think that crude oil and wholesale gasoline prices should move in the same direction, their prices are often quite different. For example, while the global supply of crude has been quite high (driving down the price of crude), the demand for local gasoline has also been high, which increases the price of wholesale gasoline. That’s why the price at the pump can remain high even when crude prices go down.
And because crude and wholesale gasoline is traded in U.S. dollars, the lower value of the Canadian dollar also has a role to play in why we see a higher price at the pump.
If you’re still with me at this point (that was a lot of information about gas prices!), thank you! We know that this topic comes up a lot over the holiday dinner table, so we thought we’d give you some information you can use. Oh, and remember my overburdened credit card? In case yours is too, just a reminder that when you link your Petro-Points card to any RBC credit card, you can save 3 cents off every litre of fuel at Petro-Canada. Now that’s some warming holiday cheer!
- Rose R.
DISCLOSURE: The Kent Group is occasionally engaged, on behalf of the Canadian Fuels Association, to provide independent third party research. Suncor Energy is a member company of the Canadian Fuels Association.