For a few glorious days gas cost 117 per litre last week and just before the long weekend it went up to 127L. It’s still 127L today. This is in Ontario, Canada.
Can someone please explain to me why gas prices fluctuate so much - aside from oil company greed, obviously. How do they justify price gouging before long weekends? How is the price of gas at the pump determined beyond station overhead, employee wages and transportation costs?
Supply and demand. People want more gas before a long weekend, the supply is pretty static over time.
And BTW, that’s not price gouging.
Gas on my morning commute has gone from $3.49/gallon a week ago to $4.39/gallon this morning. So over a 25% increase.
Here, it’s a couple of things -
The long weekend, where lots of people drive. Gas prices frequently increase around here near what are know to be driving holidays.
There are 2 local and 3 nearby refineries at are in full or partial shutdown. Shutdowns often happen this time of year, as the refineries switch from winter to summer blends, but this years scarcity and cost increase has been worse than average.
Do a search on your local area and “refinery shutdown” and see if anything pops up.
The CBC Business Report was talking about technical troubles in a refinery in Alberta that makes finished gasoline for Canada. As a result, it’s been in short supply in our market for the last 2 months or so. On a long weekend, demand is expected to peak, so when stations try to buy up enough to stock up for the long weekend, they drive up the price…
Or… it could be price gouging by Big Oil.
The gasoline price has whipsawed here in the U.S. for at least the past 8 years (since Hurricane Katrina damaged a lot of oil and gas infrastructure in the Gulf), and probably longer.
If there’s anything that drives up the market price of crude oil, that usually causes gas prices to spike upward. They do often come back down, but more slowly. The market prices are driven by speculators; news items such as talk of war in the Middle East, refinery shut-downs in the U.S., tropical storms in the Gulf of Mexico, etc., can all drive up the price of oil, because of a perceived possible drop in supply in the immediate future.
If that were a controlling factor, why would prices fluctuate? They should instead simply stay high.
You have two back to back long weekends, the vickies day here in Ontario, which is the start of cottage season, and the American long weekend coming up. So they get to say, because they only rationed so much gas for North America, its supply and demand pricing for the restocking of gas station tanks.
See normally in a demand enviroment, the supply side would up production to meet demand and keep prices stable. So that the only price spike you would encounter, is a disaster or some thing like that. Just like before Christmas, supply siders would amp up production to meet the holiday demand, you would think the energy siders would have amped up production to meet the winter enviroment, both vehicular and home heating.
So if you live in Ontario you know what that means, not freezing is no longer a good thing, its a commodity.
Declan
Prices get high and gas consumption falls (somewhat). People decide they don’t need to take that Sunday drive. They (reluctantly) buy smaller cars. An aberrant few even take mass transit. The powerboat gets left at the dock all summer. The result is that gas stockpiles build up which is a problem because storing gas costs money (and so does gearing down production).
So after a while, producers have to lower their prices to get rid of the stuff.
Gas here in CO was under $3.50 a few week ago and is now almost $3.80 and one place that is always 20 cents higher than average was at almost $4/gal. I attribute it to the fact that people are driving more now that it’s summer here.