Clampet Posted September 16, 2008 Report Share Posted September 16, 2008 Can someone please explain to me why the price at Gas Stations fluctuate so much. My reasoning is the tanks, that they store the fuel in below the pumps must hold several 1000 litres/gallons of fuel, right? When the big tanker truck pulls up, to fill them, the gas station pays the going price for that particular lot of fuel, say fer arguments sake, 50 cents per liter. Would it not stand to reason that they can lock in their price to the consumer, until they run out and get another shipment? Link to comment Share on other sites More sharing options...
gone_fishin Posted September 16, 2008 Report Share Posted September 16, 2008 that makes perfect sense to me... but who am I? I don't work for the government or the gas companies... Link to comment Share on other sites More sharing options...
ch312 Posted September 16, 2008 Report Share Posted September 16, 2008 i wish i was still doing concrete full time as i could ask one of the drivers about this. he use to own a gas station and i always had questions for him. he got out of the business as it just wasnt worth the headaches all the time and you dont make very good money at all. he said that his take home was about 4% of each sale after taxes, insurance, wages, etc. he makes more money driving a concrete truck.... just bend over and take it because theres nothing we can do Link to comment Share on other sites More sharing options...
canadianboy Posted September 16, 2008 Report Share Posted September 16, 2008 my question 3 to 4 years ago gas would be up to 3 cents cheaper at some stations and now the price is the same at all sations Link to comment Share on other sites More sharing options...
Governator Posted September 16, 2008 Report Share Posted September 16, 2008 That's a good question... that actually makes sense. Link to comment Share on other sites More sharing options...
carp-starter Posted September 17, 2008 Report Share Posted September 17, 2008 my question 3 to 4 years ago gas would be up to 3 cents cheaper at some stations and now the price is the same at all sations Having the same prices is what is called "competition" or "being competitive." The banks do it. On Third Line just south of Speers (in Oakville) is a Petro Can (a bit south of the Sunoco that is on the s-e corner). Also there are stations on the s-w and n-e corners. The prices are the same all the time - as far as I am aware. When the Petro Can was owned by the previous owners, I asked the person inside why they had a pair of binoculars on the counter most of the time. I was informed that once in a while the person working would go outside and check the prices with the binoculars so that they could change and match their price with the others. carp-starter Link to comment Share on other sites More sharing options...
Ramble Posted September 17, 2008 Report Share Posted September 17, 2008 Thats basically how it should work...my uncle drives a fuel truck. However prices change so fast that one day Station A could get filled up at 85 cents a litre, and the next day Station B across the road gets it for 95 cents a litre. Station B has to match Station A's price and absorb the cost. This means when he gets a cheap shipment he might not drop prices, or when they get an excuse to raise prices they will. However some of the stations get "told" by a higher power what to charge. Anyway thats about all i know on the subject. Sometimes he (my uncle) cant figure out how they charge what they do. Sometimes the station is making money and other times they are loosing. Doesnt make much sence but thats the way it is. -R- Link to comment Share on other sites More sharing options...
JeffBornFishin Posted September 17, 2008 Report Share Posted September 17, 2008 You guys are missing the point and not answering my question. The question is... If they buy a tanker full of fuel at a particular price, how do they pretend/justify that the cost they charge you is affected by external forces such as a tornado or a fire at a plant, or what ever? Their price for the tanker was x dollars, so they should be able to set their price to you at x amount to realize their profit margin, until their next shipment of fuel arrives. I agree 100% As long as the Government is getting the tax dollar we bend over and take it. As I burn a lot of fuel boat and business wise I am at the same station often which happens to be an Esso. The franchise owner there tells me that Esso controls the price through satellite. They have no idea when it changes its done all automatic. Its crap. We argue for fun. I said ok you paid x dollars a litre for 40 thousand litres today. Look at the profit when you boost the price tomorrow just because it happens to be thursday. No response. Wonder why. Here is another thing that gets me...why when we live in Ontario and our gas comes from Petrolia ON do we have to bend over when the rigs in the gulf of Mexico shut down for a wee storm. Rant over. Oh and I spent 153 dollars today filling the work truck. That should be good for two days. Link to comment Share on other sites More sharing options...
bigugli Posted September 17, 2008 Report Share Posted September 17, 2008 People in Venezuela are not paying world prices for the oil and gas that comes out of their ground. So why are we paying world prices for Canadian fuels. That is the bigger question. Why a gas station charges this or that price is simply price fixing to max profits. Oil company, investors and the tax man all win. We get screwed. The bigger screw is the one all us Canadians get shafted with when we sell all our resources away and pay triple, or more, to buy it back. All the while, the boys on Wall St and Bay St. laugh while they make their puppets dance in Ottawa. Why do you think the main political parties have leaders that look pretty, but lack the necessary backbone to face real issues. That's my rant Link to comment Share on other sites More sharing options...
canadianboy Posted September 17, 2008 Report Share Posted September 17, 2008 people in venezuele also pay about 400% more for everything else as grocries so all they are doing is hurting there relations with oil rich countries because the lower gas and oil is just cancelled out by the coat of living sorry about hijacking this thread Link to comment Share on other sites More sharing options...
timmeh Posted September 17, 2008 Report Share Posted September 17, 2008 You guys are missing the point and not answering my question. The question is... If they buy a tanker full of fuel at a particular price, how do they pretend/justify that the cost they charge you is affected by external forces such as a tornado or a fire at a plant, or what ever? Their price for the tanker was x dollars, so they should be able to set their price to you at x amount to realize their profit margin, until their next shipment of fuel arrives. "Having spent the last 10 years studying the energy industry I have learned how to calculate the price of gas using the cost of refined gasoline as traded on the open market. The price of gasoline is based on several variables: the wholesale cost of gasoline, taxes, and the retail margin. With little exception only the wholesale price changes day to day. Wholesale gasoline is traded on the New York Mercantile Exchange. " This is taken from Dan McTeague's website. Basically the price of gas changes with the price of refined gas on the market, which is not the same as oil. So if the market price goes up so does the price of gas. In the event of external forces, like a hurricane, people panic, speculate we'll run out of gas and die, the price goes up. So this is how it happens, as to why it happens I really don't know. It would make sense if you bought something for X dollars you sell it for X dollars plus the profit margin but that's not how it works. Link to comment Share on other sites More sharing options...
Beats Posted September 17, 2008 Report Share Posted September 17, 2008 http://www.mcteague.ca/WebPages/gas_price_today.htm Link to comment Share on other sites More sharing options...
Dutch Posted September 17, 2008 Report Share Posted September 17, 2008 Gas prices are set daily based on the "rack" price that wholesalers charge - large companies like Petro Can and Shell. It doesn't really have anything to do with the gas underground in the tanks. Gas is basically replenished in those tanks at one station somewhere in Ontario each day, so the larger gas stations charge the same or similar prices at all their stations. The other stations follow suit to ensure they are competitive as explained above. The rack price for tomorrow will be set sometime today, I think that's how it works. That's why that McTeague website knew it was going up 12 or 13 cents last week overnight. Keep in mind that there are taxes that are included in the price of fuel: Federal gasoline excise tax - $0.10/Litre Federal diesel tax - $0.04/Litre Provincial gasoline excise tax - $0.147/Litre GST - 5% of the purchase including the above taxes, so we essentialy get "taxed on tax." When buying coloured diesel one of the taese is not levied, I think it is the $0.04, but could be wrong. What all this boils down to is that in Ontario all the taxes levied add $0.295/Litre to the cost of gas. It's important to note that a whopping $0.02 of the Provincial $0.147/Litre is forwarded on to Municipalities to do road, bridge and transportation improvements. Quebec - particularily Montreal because of a regional tax, is taxed the highest on fuel - $0.387/Litre. The Yukon is the lowest at $0.21/Litre. Average for all of Canada is $0.31 or so, in Ontario we are below the average. Comparable in the US, there is only $0.12/Litres in taxes. The best thing to do to avoid high fuel taxes is to fill up across the border. Link to comment Share on other sites More sharing options...
Beats Posted September 17, 2008 Report Share Posted September 17, 2008 It was kinda funny. Today my dad was telling us kids how he has had the same gas can for decades to fill the lawnmower. He said he used to have a hard time to get $2 into the can and nowadays it costs about 13$. The gas hasn't changed any, what gives? Kind of makes you wonder. Link to comment Share on other sites More sharing options...
Rattletrap2 Posted September 17, 2008 Report Share Posted September 17, 2008 Clamp-it, We do understand your very rational approach to all of this, but who said we were talking about rational people or processes? LOL I try to buy the majority of my gas from a small independent station on my way to and from work. I do this because he always charges a cent or two less than the others around him. Since i am in there on a regular basis, we always discuss the prices while my credit card purchase goes through. On many occasions, he has shown me the paperwork that he receives from his fuel supplier (Sunoco) that gives him what price he will pay for the gas sold each day. This price sheet is for a month in advance and details each day of the week or month. For instance, he showed me that his cost would go down 2.7 cents per liter plus GST at midnight tonight. So, he receives his regular fillings from the tanker to keep his underground tanks full, but the price he will pay for the actual liters sold on a given day will cost him a pre-determined amount per liter. It has nothing to do with the price of a barrel of crude or the hurricanes in the south. It is all a game that they are forced to play. He decides how many pennies per liter he wants to make. He always stays slightly lower than his neighbouring stations and his volume is always higher for a given day. The profit for the station is only a couple of cents per liter. Another station I go to for boat gas up north told me that their volume is very low for any given day. They are on a lesser travelled road and only have so much traffic to deal with. She told me that if even one customer drives off without paying for their gas, that their entire profit for the day is lost. I would think She is telling the truth. They have to operate a store as well to pay their bills. I also used to service Petro Canada stations for a few years. Their Management told me that the profit to the station from gasoline sales was peanuts. The real profits come from their car washes first, and then their convenience store sales second. Link to comment Share on other sites More sharing options...
John Bacon Posted September 17, 2008 Report Share Posted September 17, 2008 Can someone please explain to me why the price at Gas Stations fluctuate so much. My reasoning is the tanks, that they store the fuel in below the pumps must hold several 1000 litres/gallons of fuel, right? When the big tanker truck pulls up, to fill them, the gas station pays the going price for that particular lot of fuel, say fer arguments sake, 50 cents per liter. Would it not stand to reason that they can lock in their price to the consumer, until they run out and get another shipment? What happens when the gas drops in price? Would he be expected to continue to maintain the higher price because he bought it at the higher price? What if a gas station across the street just filled up with the new cheaper gas and was passing the savings on to the customers? He would either have to sell his expensive gas at a discount (possibly at a loss) or close his station until the price rose again. Nobody is going to buy his gas if he is charging more than the guy across the street. If you were an owner who had filled up on day one at 50 cents a litre while the station across the street had filled up on day two at 55 cents a litre. Suppose that it is now day three and gas is selling for 60 cents a litre. Would you price your gas 5 cents a litre below the station across the street knowing that you will run out of gas and have to re-fill at 60 cents a litre and then have to choose between selling at a loss or pricing your gas 5 cents a litre more than the station across the street. How much gas do you think you would sell if your price was 5 cents a litre more than the station across the street? What do you if the price is back down to 50 cents on day four and you have a full tank of 60 cent a litre gas that you bought on day three? In summary; no I do not think that it would stand to reason that they could lock their price in because they were luck enough to have filled up before the price increase. Link to comment Share on other sites More sharing options...
fishinggeek Posted September 17, 2008 Report Share Posted September 17, 2008 Here's my take on it. Gas stations are often independently owned, and there are many of them, so it is a highly competitive market. If one station owner decided to lock in the price at the level they paid for it, in other words, until the tank runs dry, the station owner absorbs all the short-term price risk. Now this wouldn't be a problem if every single gas station did this, but if only one out of many would adjust their prices down by just a bit whenever the gas spot price lowers, then we have an arbitrage situation because customers can get the same gas for a lower cost. This gas station owner would reap all the profits, so others would follow suit and stop locking in prices. The ones that don't over time will not survive because of the high level of competition. This is the reason why the suppliers in highly competitive markets must be "price takers". Link to comment Share on other sites More sharing options...
Stoty Posted September 17, 2008 Report Share Posted September 17, 2008 Basically, its just a bunch of Bull. Two words sum it all up..... Supply & Demand. The gas companies know we HAVE to have gas, therefore can charge $1.38/L and we will pay it. Heck, they can charge $2.00/L and we are still going to pay that. Until a whole bunch of people take a stand and don't buy guys for a while, nothing will change. I just dont know how certain people can sleep at night knowing they are bending everyone in Canada over each time we go to the pumps. How can you be alright with charging people the same price per litre today, when a barrel is worth $91, as you did a few weeks back when it was $140ish a barrel? Its obvious that its gouging....but no one is doing a darn thing about it. Link to comment Share on other sites More sharing options...
Guest gbfisher Posted September 17, 2008 Report Share Posted September 17, 2008 Buy a Gas Station and find out...... Don't worry though. It will go back up. They buy gas at different times each month. Depending on what they get charged upon delivery. They set their price. If it goes down. They lose. Up they make. Its rather simple really. If you could make more money off of something that everyone needs. Wouldn't you make it? OR would you give everyone a break......... Link to comment Share on other sites More sharing options...
Stoty Posted September 17, 2008 Report Share Posted September 17, 2008 There a big difference between making "more money" and "bending people over". Link to comment Share on other sites More sharing options...
keram Posted September 17, 2008 Report Share Posted September 17, 2008 There a big difference between making "more money" and "bending people over". I do not see it. Link to comment Share on other sites More sharing options...
Stoty Posted September 17, 2008 Report Share Posted September 17, 2008 How can you not see it??? How can they charge $1.29/L when a barrel is worth $140ish a few weeks ago....YET... still sell it today with a barrel being worth $91ish. Explain how thats not "bending people over" and taking advantage of "Supply & Demand"?? Link to comment Share on other sites More sharing options...
ozaibak1 Posted September 17, 2008 Report Share Posted September 17, 2008 People in Venezuela are not paying world prices for the oil and gas that comes out of their ground. So why are we paying world prices for Canadian fuels. That is the bigger question. Why a gas station charges this or that price is simply price fixing to max profits. Oil company, investors and the tax man all win. We get screwed. The bigger screw is the one all us Canadians get shafted with when we sell all our resources away and pay triple, or more, to buy it back. All the while, the boys on Wall St and Bay St. laugh while they make their puppets dance in Ottawa. Why do you think the main political parties have leaders that look pretty, but lack the necessary backbone to face real issues. That's my rant Exactly. The price of the gas and oil is not actually dictated by the 'free market.' The reason the prices fluctuate so much is people are manipulating them. The dictators dictate the price. Its quite simple. Link to comment Share on other sites More sharing options...
Canuck2fan Posted September 17, 2008 Report Share Posted September 17, 2008 Would it not stand to reason that they can lock in their price to the consumer, until they run out and get another shipment? They could do that but then the millions of rich little blood sucking speculators wouldn't be able to make an extra profit. The excuse is that since it is a commodity it is OK to pillage customers at EVERY opportunity. Funny though pork bellies are a commodity too and I don't see someone in a supermarket running about madly with a pricing gun everytime the price changes for them in Chicago at the Merchantile Exchange. I am starting to see the very real possibility that in the not too distant future a blissful time for us customers where these speculators, oil execs and toady politicans who allow this sort of thing to go unquestioned are tried for and convicted of crimes against humanity LOL I can dream can't I? Link to comment Share on other sites More sharing options...
Billy Bob Posted September 17, 2008 Report Share Posted September 17, 2008 (edited) There are THREE things we all need to live. 1) FOOD 2) WATER 3) GASOLINE (in today's modern world) Now here's a question nobody what's to address.......... Why are they still selling gas for example $3.99/9 per gallon. Didn't this outlive itself when gasoline started to sell for over $2 per gallon ? ? ? (Please forgive the US denominations) Edited September 17, 2008 by Billy Bob Link to comment Share on other sites More sharing options...
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