Tuesday, September 16, 2008

Gas Prices

The cost of oil is now below $100/barrel. Prices fell 9c/litre. But they had gone up 16c/litre since the crude oil price spike leaving a net increase of seven cents. Why is this? Comments welcome!
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4


  1. If refining capacity is lowered, then there is extra crude oil, pushing crude prices down, and there is less gasoline, pushing gas prices up. This is very typical behaviour for the price difference (aka 'spread') between a refined and unrefined commodity. It appears that it will take some time for refineries in Texas to get back up to 100% following the hurricane. It's also possible there are other bottlenecks, or perhaps gasoline storage tanks are being replenished.

    One has to check all these normal possibilities before concluding that there is any sort of price fixing going on (which is not to say there isn't any going on).

    Ultimately, the ability of consumers to throttle down their demand for gasoline has to play a role in keeping gasoline prices down.

  2. That's a good set of points tedhsu...

    As far as price-fixing - we've even had public evidence of it down east (reported on national news programs).

    On a completely unrelated topic... take a look at the membership rolls of Conservative MP's riding associations in the Province of Alberta - particularly in Calgary. Many of the membership has one particular industry in common. Completely unrelated, and they probably wouldn't have anything to gain from such a mutual relationship...