You likely saw the articles on your favourite news sites yesterday, or heard the radio reports on the way to work. The price of crude went up around 3%, largely based on the news of the Iraq insurgency and the potential of oil supplies being disrupted. And when crude goes up, the cost of gasoline at the pump is at risk of rising as well.

You’ll often hear examples of the factors which effect the price at the pump. Natural Resources Canada lists the following price influencers:

• Changes in world crude oil prices
• Availability of supply to meet demand
• Local competition among retailers
• Seasonal demand
• Inventory levels

Given the impending water cooler talk, we thought it may be helpful to provide a little context on a few of those factors.

Commodity Market Fluctuates Daily
Gasoline and crude oil are commodities - they are bought and sold at prices determined by commodity markets. It's like when we plan a trip to the US: depending on the day, we will pay a different exchange rate for our Canadian dollars; that exchange rate is determined by currency markets.

Similarly, on the commodity market, the wholesale price of gasoline changes daily, depending on the market's reaction to the price factors above.

Effect of Wholesale Gas Prices on the Price at the Pump
Wait, why do we care about wholesale prices for gasoline rather than the retail price? At Suncor, we produce and sell gasoline from our refineries, but we also purchase gasoline on the wholesale market to round out our supply and make sure that all of our stations (and customers!) have the required fuel. The wholesale market's prices are set on a daily basis (you can track the daily wholesale market price on Natural Resources Canada's site).

So for all the gasoline that we produce and sell, we follow the accepted daily wholesale price set by the market. You can read more about the relationship between gas prices and commodity prices in a previous PumpTalk post.

- Corinn S.

As the first long weekend of the warm weather days is fast approaching, we thought we would take the time to comment on the regularly occurring question that we receive: “Why do gas prices appear to go up right before a long weekend?”. This question usually comes up before every long weekend we have. We have written several posts about this topic and we wanted to enlighten our readers about it again, as the Victoria Day long weekend is right around the corner. 

We already know that gas prices are affected by a number of factors including cost of crude and the cost of gasoline at the wholesale level. This was the subject of our last post on gas pricing: “Gas Pricing: What Factors Affect the Prices You See At The Pump”. We also have discussed how powerful an effect local competition has on gas prices too in our PumpTalk video: “Why Do Gasoline Prices Go Up and Down?”  

Now, the question at hand – Why do gas prices seem to go up right before a long holiday weekend? Back in June, our post, “Dispelling the myth about long weekend gas price hikes” linked to a report that was released by M.J. Ervin & Associates (a division of the Kent Group). This report reviewed pricing data around long weekends in Canada from the present, back to 2006. In the report, Michael Ervin concluded that: 

    “The aggregated results indicate that week-over-week retail prices are no more likely to increase during the week immediately before a holiday. In fact, our findings revealed that the number of price increases during the week of a holiday was slightly less than that of weeks not related to holidays.” 

You can read the full report here: Report: Holiday Weekends and Fuel Price Increases: Fact or Myth?

The press release can be found here: Holiday Weekends and Fuel Price Increases: Fact or Myth?

We hope this helps, and as always, we welcome comments and feedback from our readers. PumpTalk was created to facilitate the discussion, so let’s keep the conversation going!

- Julie S.

Gas prices are always a common subject for PumpTalk readers, so we decided to provide you with an update on pricing and what elements make up the price you see at the pump.  The two largest factors that influence gas prices are crude oil costs and taxes.  Following that is the cost of refining and marketing – which is all costs of operations – including the costs of refining and distribution, along with all marketing and operational expenses at the retail level.  

Other elements to consider are local competition and commodity gasoline prices. We discussed this in more detail in a previous post on gas pricing. 
Let’s focus on the largest piece of the puzzle – crude oil pricing.

We have had many questions come in to the PumpTalk blog regarding diesel pricing and why they continue to be above gasoline prices. In this week’s post, we’ll help answer these questions.
First, I’d like to remind everyone that diesel has more than one use versus its sister, gasoline, whose primary use is transportation. This means that, unlike gasoline, demand for diesel is based on more than vehicle population. Diesel has many other uses in industries like in freight, construction, agriculture and ports.

Now let’s shed some light on pricing.

Photo: iStockphoto

When we're talking about oil prices, we see these two terms in the news a lot: WTI and Brent Crude. What do they mean - and what's the difference between the two?

Not all crude oil is created equal - different API gravity (an indication of the ability of the crude to make gasoline) and sulfur content, for example, affect the grade and classification of crude oil. WTI (an acronym for "West Texas Intermediate") and Brent Crude are two different classifications of crude oil.