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The Truth About Gasoline Pricing...

Posted 4/11/2020

As I regularly travel outside the Toronto area by car, I am totally blown away by 15 cents per litre gas disparity pricing between the GTA and “the boonies”. We're told that the prices in Toronto and other major Canadian cities are greatly not influenced by the world price but merely by competition. Clearly when a gas station 30km from the nearest station has lower prices than Toronto, you know something’s up. It contravenes common sense; the complete opposite from what happens in the real world. No competition means lower gas prices? C’mon.

An oil industry insider told me that the few wholesalers and refiners in Canada have agreed to break up the country into regions and each refiner is free to dictate the price in their region. In Toronto, I’m told the pricing is controlled by Imperial Oil. I guess the outskirts are a free market since their pricing seems to remain relatively consistent just like those in the US. Systematically (and almost like clockwork on every long weekend), the prices all shoot up to exactly the same price at midnight. If you were in any other business, you’d drop the price by a 1/10 of a cent to get the business. No one does that in the GTA anymore. You simply wait until 430pm every weekday and you will be told what tomorrow’s gas price will be! NO COLLUSION. Yeah? A federal government MP soon figured out their calculation scheme and set up a website which was promptly and forcibly shut down.  Others soon figured out the formula and promptly posted that information online.

Don’t get me wrong, while I don’t like paying more for gas than the next guy, it irks me to no end to be at the mercy of 21st century coal barons (if you don’t know what I mean, then you really need to brush up on your history). Why not agree on a price and keep it there for a few weeks? Just like the good old days - or the rest of the world.

Maybe to get some mileage (pun intended) with the masses and improve the optics with the consumer, why not introduce pre-paid gas cards that dispense fuel based on litres NOT cash? That way we can all play speculators. I can give the petroleum folks a large chunk of change when the prices are low and use it whenever I feel the need? Makes too much sense to me – but then again, I don’t have a MBA from a prestigious English school. I would openly promote any gas company that did that! There's a challenge, but don't hold your breath.

While I’m up here on my soapbox, why is it that Canadian stations only display regular and diesel prices? That’s because the prices to premium vary WILDLY from station to station. PROFITS abound!

I started keeping track and checked out prices of 87, 89 and 91 octane fuel. I didn’t bother checking those who sold other grades.

Since almost everyone sells regular at the exact same price in Toronto here’s what I found:

Four to eight cents variance between 87 and 89 octane.

A further four to eight cents variance between 89 and 91 octane.

Now I know what you’re thinking. Jeese, the difference is insignificant between fill ups. True. The clincher for me is that all the sheep (those who simply say “what can I do about it”) participate and donate the difference to the purchase of the marketing VP’s fancy new 108-inch flat screen TVs. In the past year, the price of gasoline has far outpaced ANY commodity. Cocoa is catching up (but I digress). On an average sixty litre fill up, even paying on the higher scale, there’s only really an eight cent difference or merely $5.40 more per fill-up! A fill up per week is only about $280 more per year. But what people sometimes fail to realize is that the overall price continues to go up. Remember it slowly creeps up.

What irks me is that we all lean back and do nothing about it. With every increase, a million people paying on average $250 more each. That’s 250 MILLION DOLLARS that go directly into the coffers of these multi-nationals every time the price is adjusted. Do the math. Don't take my word for it.

So the government has investigated, c’mon why would they be motivated to look a gift horse in the mouth? With the taxes they bring in, never would they bite the arm that feeds them so to speak? As prices inch up, so do the taxes collected.  They claim there is no wrong-doing. No collusion. Hummmph!

A few years ago, if the wind blew slightly the wrong way, the companies would shut down an oil rig and the price would spike on the world market. But when a petroleum conglomerate and it’s suppliers accidentally cause a world catastrophe (like the BP disaster on the US gulf coast), the prices on the world market go DOWN. Is this an attempt to draw attention away from what they’ve done?

I’m always amazed how an increase in world commodity prices are reflected almost immediately at the pumps but significant reductions take “some time to clear the system”. Grrr. I get angry just writing this.

Then there’s the financial disaster of 2008. It’s been repeatedly suggested that it was the petroleum speculators that caused the collapse. They drove virtual petroleum prices through the roof which in turn caused an escalating chain of events. Suppliers cut back on shipping or passed along the shipping costs. You can follow this yourself. Now the unrest in between Russia and Saudi Arabia caused the chain reaction again. During the last petroleum price increases, large retailers  announced they have no choice but to increase food prices on average of 5%.  With the current collapse of oil, food prices haven’t changed.  I still get fuel surcharges on my packages.  Why’s that?

Maybe I’m just making this stuff up. After all, I’m alone in this right?

I for one, am seriously considering getting off my petroleum fix and buying an electric car like the Nissan Leaf. Worse case, I’d even consider buying a Chevy Volt to avoid buying a ICE (Internal Combustion Engine) vehicle.  Imagine if only 10% of us did that. As I digress, Nissan’s Leaf sold out before it went into production.  Volvo announced they will soon discontinue petroleum-based vehicles.  That says something doesn’t it? I guess the petroleum companies are buying them up to keep them off the road.  The sad part is with petroleum prices now at record lows, folks might give up the electrification momentum.

Man, I hope I don’t fall off my soapbox anytime soon. If I do, it will be a long way down. I'm sure there are plenty of people out there who would wish I would fall and break my neck!

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