So, you already know that there's variance in gas prices between Canada and the US, even by province and state. Local market conditions like size of market, processing and distribution costs, overall demand and competitive price play a large role. Looking outside of North America is an interesting exercise, and one that works well visually. Here's a cool map that shows gas prices across the world.

Image: http://flowingdata.com

This week, I wanted to provide an updated view on crude oil and gasoline, and how prices are set. Michael Ervin is an expert gas analyst and although this Globe and Mail article is a couple years old, his responses to reader questions are extremely insightful and still hold true! He goes beyond this and also discusses diesel, the actual effect of boycotts and many other subjects.   Fascinating article: “Explaining Sky High Gasoline Prices” - hope you like it!!

- Erin F.

Photo: iStockphoto

One of the most common questions we still get as spokespeople at Suncor is: 

“Why does the cost of fuel go up right before every long weekend?”

For years, we have been telling our readers that it is simply a myth.  Now, thanks to a piece of research released this week by M.J. Ervin & Associates (a division of the Kent Group), a review of the pricing data around long weekends across Canada since 2006 has been completed.  (DISCLOSURE:  This work was done by M.J. Ervin & Associates on behalf of the Canadian Petroleum Products Institute (CPPI), to provide independent third party research. Suncor Energy is a member company of CPPI).

Crude oil is a commodity, like coffee or wheat, with prices set on global markets. Just as a poor coffee bean harvest can increase the price of your morning coffee, when something significant happens to the supply of crude oil or gasoline, prices may be affected. Local competition is a big factor too. If one site drops the price to get more business, other sites in the area may adjust their own prices to keep customers from going down the road. So retailers continuously monitor and adjust prices to remain competitive.

Crude oil is not the only factor in setting the price we pay at the pump. Wholesale gasoline is also a commodity that’s traded on markets, so local market forces play a significant role in determining the retail price for fuel. Another significant factor is taxes, which vary both within Canada and around the world. In Canada, every province and even some individual municipalities apply taxes at different levels, which can contribute to the regional differences you see at the pump. In the U.S., there are also federal, state and local taxes, but often at much lower levels than in Canada.

Let us know if you still have questions!

PumpTalk was our company’s first foray into the blogosphere and we have since participated in other forms of social media. For instance, we've created Suncor Response, a blog that helps us convey information about relevant events we are responding to. Today, we have that site directed to our response to the situation in Libya. We also provide an online newsletter, Oil Sands Question and Response (OSQAR). In fact, a recent OSQAR post, Why it does matter where your oil comes from, talks about how the unrest in North Africa and the Middle East have once again reminded us how the price of gasoline is linked to both the demand for oil and the stability of oil supply.