Gas prices

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Gas prices

Postby craigt » Apr 27th, 2006, 8:34 pm

go figure, dollar goes up value of the barrel for crude oil goes down but is there any reflection of that at the pumps ( NO )
89 to 104 per litre in down town toronto
hmmmmmmmmmmmmmm
no frigin oil wells there
gets shipped from alberta 3000 miles away and they pay less?
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Re: gas prices

Postby JockItch » Apr 27th, 2006, 8:48 pm

craigt wrote:gets shipped from alberta 3000 miles away and they pay less?




Ya. Thats where Parliament is. And from there, BC is too far away to care about.


."
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Postby NAB » Apr 27th, 2006, 9:13 pm

Hello again :-)

I am trying my best to enlighten BC consumers who are interested as to the things driving gasoline prices in BC. I have established a rudimentary blog with data on the topic at

http://www3.telus.net/greentrails

and am prepared to discuss specific pricing issues related to current crude oil and gasoline prices here. Other issues such as alternatives to using gasoline would be best discussed under threads pertaining to that particular topic, even tho they do at some level influence the demand side for oil and gasoline. However, use of ethanol (alcohol :-) ) as a blend or as replacement for gasoline would also be appropriate here since it has a lot to do with current general pricing issues.

Cheers
Nabcom
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Postby NAB » Apr 28th, 2006, 4:22 pm

Tips...

A branded retail gasoline outlet that is managing its business well ((and the marketing division of the company they represent ("head office")) monitors daily, weekly, and monthly volumes of gasoline sold. These generally are the pricing leaders (the rest just follow). There are some basic indicators as to what consumers think about their current service, products, discount programs, and pricing. The main ones being whether volumes of gas sold are climbing, historically static, or declining. A second indicator is the average size of the individual sales.

In a marketing area...... (seasonal volume issues aside)...

-If prices are static, that generally indicates consumers are OK with current pricing. This will lead to 'testing' higher prices to see if the local consumer can bear more.

-If volumes are climbing, that generally indicates they have not reached the highest price the local market will bear and there is room for more increases.

-If volumes are dropping (seasonally adjusted), it indicates they have reached or exceeded their customer's pricing tolerance level and they are going elsewhere in search of cheaper gas or discounts, or cutting back (being more efficient) in their consumption of gasoline.

-If 'small sales' are becoming the order of the day (eg: a lot of partial tank purchases - say $10.00 or $20.00) they know that they have gone way too far and are likely to back off a bit until the indicators straighten out.

Consumers do rule, although only on a mass basis over a long period of time. Things like local gasouts, picketing, griping, or boycotts may lead a few consumers to feel better, but will have absolutely no effect on prices at all, other than perhaps hurt the retail operator in a single instance or through a particular brand in the local area, even if it could be organized. So save your breath and stress and put your personal energy into things that will really work. Reduce the amount you spend per month on gasoline in Kelowna by 20 - 40% through whatever works for you (even if it means buying outside town whenever the opportunity arises) and, in a time of rising prices, keep your tank full through small purchases. If you can do this yourself, and perhaps organize enough people to do likewise, even commence a public campaign to do so, you will see results in terms of lower monthly fuel costs very quickly.

Forget about the world price of crude oil, exchange rates, and related factors, including taxes. They operate at levels far beyond the influence of local consumers so it is a mugs game and just leads to frustration. It really has very little to do with anything significant at the local level related to local gas market pricing other than establishing the overall trend through the longer term. The price your local dealers pay for the gasoline in their retail outlet tanks is fairly uniform comparatively most of the time, not only locally but across the country. Volume is the over-riding driver.

Another factor is competition. If an area is undersupplied, especially if distance to competitive prices is prohibitive, and retail margins as a result are high and comfortable for retailers in an area, there is unlikely to be much in the way of local competition. One way to promote competition is to move your fuel purchases around seeking the lowest net price for gas wherever you find it, even if you are not approaching empty. Most of the time that is based on opportunity rather than your gas guage signalling potential disaster at the side of the road. Brand loyalty on the part of consumers is part of the marketing weaponry. Outlets will compete to get your business back if at all possible.

Cheers
Nabcom.
Last edited by NAB on Apr 29th, 2006, 7:28 am, edited 2 times in total.
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Postby commonsense » Apr 28th, 2006, 7:07 pm

nabcom...you seem just a tad bit well read on the subject...tell us...as individuals, what would you recommend we do to make some level of impact against these rising prices? Other than switching to alternate unaffordable options, is there anything we can do to make change?
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Postby NAB » Apr 28th, 2006, 8:24 pm

Thanks commonsense. It is my view that, as "individuals", there is little that can be done beyond what I mentioned above, which I will repeat below...

We must remember that there is one set of influences that govern what the prices are at the "rack" - the wholesale prices that are paid by the retail outlets for the gasoline you purchase at the pumps. These are the things like the price of crude oil, the price of gasoline futures on the commodities exchange in New York, and the pricing behaviour of the refineries in Edmonton that supply the local system via Kamloops. I might point out that refineries in the US take far less from the system than those in Canada.

The crude oil and gasoline prices frequently quoted that most people relate to are futures. In the case of gasoline, current futures prices for June delivery. They have nothing to do with current prices of gas that is in the system other than to send a pricing signal as to where they are going.

The second set of influences have to do with local market conditions and local consumer behaviour, combined with that 6 cent added tax for transit purposes that applies in Vancouver area, a tax that influences retail prices throughout the province even tho they don't apply there (with the notable exception of prices in the Fraser Valley, commonly Abbotsford - who are very competitive due to proximity of cross border availability and competition - and, unlike Kelowna, tend to recognize the lower tax regime)

Consumers in Kelowna, much like consumers on Vancouver Island and elsewhere in BC outside of Vancouver, cannot influence the first set of criteria, but can in fact influence the second - the local retail gasoline market which is currently overpriced, and it is the difference between the rack price and the tax removed retail price that shows where the problem lies.

Kelowna consumers simply have to pull in their horns on an individual basis and consume less gasoline on a local basis - in effect withholding their dollars from the local gasoline market throughout the community - not on a selective basis, even if it means preferred buying of gasoline in Winfield or the Westside, or from big box retail outlets that offer discount coupons against purchases in their stores.

Here's what I said above that bears repeating...

"Reduce the amount you spend per month on gasoline in Kelowna by 20 - 40% through whatever works for you (even if it means buying more outside town) and, in a time of rising prices, keep your tank full through small purchases (rather than running it right down and purchasing a full tank). If you can do this yourself, and perhaps organize enough people to do likewise, even commence a public campaign to do so, you will see results in terms of lower monthly fuel costs very quickly."

In other words, don't purchase gasoline from ANY Kelowna branded retailers like Esso, Mohawk, Chevron, Husky and especially Petro-Can and Shell if there is any possible way you can avoid it. Yes, that may sound rather revolutionary and anti-community, but I can assure you they will get the message very quickly if enough people did it and stuck with it. It's not a boycott or a gasout, just refusal to spend your money with them IF you have an alternative.

That won't influence anything upstream, like the price of crude, but it will certainly make sure that the local marketing segment plays fair in Kelowna, which they haven't been doing for as long as I can remember, and which I last addressed as a result of the price runups about 5 or 6 years ago. There is simply no excuse for retail outlets outside Vancouver to be taking (as they have been for a long time) that additional 6 cents per litre from consumers.

Cheers
Nabcom
Last edited by NAB on Apr 29th, 2006, 6:41 am, edited 2 times in total.
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Postby NAB » Apr 28th, 2006, 9:03 pm

Whoops :-)
Tried to insert an image but it's too big for here
Last edited by NAB on Apr 29th, 2006, 6:42 am, edited 2 times in total.
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Postby NAB » Apr 28th, 2006, 9:08 pm

Image
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Postby Tony » Apr 29th, 2006, 9:23 am

Nabcom- you mentioned that prices in Abbotsford are lower because of cross border shopping. I find that this is not plausible explanation, as we have Osoyoos here which is a mere 11 km from Oroville, and their gas prices are the same as everywhere else in the Valley.

What irks me is that we can produce enough gas and oil in Canada to supply ourselves. Why don't we pass on OPEC and their pricing policies, and work out a fair and equitable deal for ourselves.

Of course, then the oil company's couldn't make their 21 billion this year........... awwwwww- poor them.[/quote]
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Postby NAB » Apr 29th, 2006, 10:19 am

Hi Tony - good points to raise.

In the case of Osoyoos prices, historically prices there have responded to competitive cross border gas pricing issues, particularly in the summer tourist season. If they are losing anticipated sales volumes, they will respond very quickly to correct that, at least to some degree. The lower mainland is different simply by virtue of the sheer quantity of cross border traffic, and not just for shopping reasons either.

Abbotsford has a long history among moxie travellers as one of the places to stop and top up going either direction. Others are Duncan area on Vancouver Island and Kamloops. The retail outlets in those locations play a bit more fairly over time, and sell huge amounts of gasoline and other convenience products as a result. In balance however I, (and many others), absolutely refuse to purchase gasoline in such locations as Kelowna, Nanaimo, and Golden, and will continue to do so as long as prices there fail to reflect the lower taxes involved. We also withhold our business from outlets in Vancouver (Actually the GVRD) only because prices there contain 6 cents that goes to TransLink in support of local mass transit. If I lived there and benefitted from that I wouldn't begrudge paying the local tax however.

On your second point, your irritation is well founded for a variety of reasons. It is my opinion that NAFTA is the essential driver of that, combined with out of control consumption by consumers south of the border based on somewhere around 45% of their oil being imported, a lot of it from Canada (and which contributes immensly to Canada's overall economy), and who do not appear ready as yet to adjust. Rising prices there of course drag our base prices along with it, regardless of tax differences.

It is my understanding that clauses in NAFTA stipulate that oil and gas cannot be sold to the US at prices higher than those established in Canada. I don't know of any stipulation however that prevents us from selling to the US at prices lower than here, which appears to happen.

Another item that set us up for this was the pre NAFTA failure of the NEP (National Energy Policy) of the Trudeau Liberals era.

But none of that mitigates the relative pricing behaviour in local markets in BC outside of Vancouver when they are so obviously high by 6 cents on a constant basis.

Cheers
Nabcom
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Re: gas prices

Postby Canada4Life » Apr 29th, 2006, 10:50 am

craigt wrote:go figure, dollar goes up value of the barrel for crude oil goes down but is there any reflection of that at the pumps ( NO )
89 to 104 per litre in down town toronto
hmmmmmmmmmmmmmm
no frigin oil wells there
gets shipped from alberta 3000 miles away and they pay less?

JockItch wrote:
craigt wrote:gets shipped from alberta 3000 miles away and they pay less?




Ya. Thats where Parliament is. And from there, BC is too far away to care about.



You're not serious are you? Parliament in Toronto?
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Postby NAB » Apr 29th, 2006, 11:02 am

Hi Canada4Life.

I wonder if it would be possible for you to narrow your great graphic a bit :-). It tends to push the whole thread wider on monitors running 800 X 600 resolution, requiring sideways scrolling to try and read the thread posts.

Cheers
Nabcom
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Postby Canada4Life » Apr 29th, 2006, 11:10 am

Oh. Sorry about that. It's fixed now.
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Postby NAB » Apr 29th, 2006, 11:16 am

Thanks so much :-) :-) I would run higher resolution but the eyes cannot take it
Cheers
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Postby Canada4Life » Apr 29th, 2006, 11:26 am

And my eyes can't take lower resolution. :lol:
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