Gas gouge? Call for a review of pump prices

“We’re in a time when the government should be stepping up because we are in a time of need and crisis, and we should not be allowing such [discrepancies] in prices,” Greg Dionne told paNOW. “Lots of people are being laid off, lots of people are [being] sent home. The dollar is going to get a lot tighter.”

According to Dionne, it’s the number one complaint he has been getting from constituents recently.

P.A., Melfort and North Battleford prices were sitting around 89 cents to 91 cents a litre on Friday. In Rosthern they were around the 75 cent mark. Saskatoon was at 77-79 cents, while Regina motorists were paying only 69-71 cents.

Michael Ervin is the senior vice-president of the Kent Group, an Ontario-based analytics and consulting service, specializing in refining and fuel marketing.

Ervin explained there are four components that go into gas prices.

“What the crude oil price is, that’s the raw material; what markup exists at the refinery level; what markup exists at the retail level; and finally, taxes that get added on to those,” Ervin told paNOW.

Out of the four factors, Ervin noted the important ones effecting pump price changes are crude oil price and the refiner market which are currently in a state of flux due to the COVID-19 outbreak. He added the early indications were that demand for gasoline has declined in Canada as well as globally.

As for discrepancies between different communities and businesses Ervin concluded it could be caused by a few factors including when the gas stations bought or received their last major order.

“Local competition and when dealers decide to move their price,” he explained. “Keeping in mind that generally dealers are going to move their prices once they receive a lower priced delivery of fuel from the refinery,” Ervin said.

He also explained low crude oil prices sometimes take a while to impact pump prices because refineries are locked into prices set at a past date which may have been higher.

When asked how long the price of oil will stay down, Ervin said it’s uncertain.

“In 30 years of being asked that question I always have the same answer, ‘I don’t know,’” Ervin said. “I think the trend is they are going to stay down for quite some time because clearly over the next several months global social distancing is going to cause a dramatic demand decline for both crude oil and of course for gasoline.”

Ervin explained many crude producers are barely breaking even, which is an indication prices are at or near their low point.

It remains unclear if market forces and local competition – or a lack of it – does anything to reduce the price discrepancy between Prince Albert and some other communities.

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Ron.quaroni@jpbg.ca

Twitter: @RonaldQuaroni

by Ronald Quaroni

Gas gouge? Call for a review of pump prices

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