Gas prices

[Jerry J. Fortin]

The futures market is driven by supply and demand, or at least projected supplies and demands. That said, it is not Alberta that has anything to say about this. The folks that do have a say are a four letter word, OPEC. These folks raise and lower "ADVERTISED" rates of production on a regular basis in order to manipulate the futures and spot markets. In fact that was the real reason behind the formation of the group.

Is there really any question why the USA wanted to involve itself in the middle east? Set aside the fact that Canada is the number one exporter of oil to the good old USA, we are politically stable and right next door. There is a lot of oil there that needs to be outside of the control of OPEC to serve the best interests of the USA.

The cold hard truth of the matter is that the US is an energy intensive economy and culture. They must have a secure supply of oil or their economy will crumble overnight. The threat of a supply issue creates a specter of demand that drives the markets upward on nothing more than speculation. Is it any real wonder that a factual supply issue does the same thing?

Folks we need to wake the hell up and see that our best interests are served by working with the USA, not against them.

[Smallc]

The futures exchange helps set speculative gas prices and is manipulative AT BEST, which I think we are both acknowledging. You could probably make the case that the oil companies themselves may be manipulating them to drive up price/demand artificially. It still doesn't change the cost of producing gasoline, as you know. It just helps them drive margins higher.

Oh, I'm with you, I just think that the point needs clarifying when it comes to how gasoline is priced.

[Moonbox]

Folks we need to wake the hell up and see that our best interests are served by working with the USA, not against them.

I agree to some extent, but it's not really relevant to the discussion....

[Jerry J. Fortin]

I agree to some extent, but it's not really relevant to the discussion....

Really? I think the discussion is about the cost of oil/gasoline. Given that the greatest consumer of the commodity is the USA, and considering that Alberta/Canada is the largest importer of that commodity to the USA, I thought that the comment was indeed relevant. Working with the USA would better serve both their interests and ours providing mutual benefit. As such, this provides Alberta/Canada with at least an ear in the court so to speak, if not in fact a voice. The USA is a if not the superpower of the world, being friends with them is functionally beneficial if nothing else.

Canada has the resources that the USA needs, from minerals to foods, from water to oil we have everything, and enough to spare and profit from at that.....

[Hydraboss]

75-80% of the price of a litre of gasoline is from crude. As crude prices go up, the proportional costs of taxes, refining etc all go down.

Gasoline trading seperately from crude doesn't affect what the ulimate cost of bringing a litre to the pump is. The futures exchange is a beast entirely to itself, which is what I assume you're talking about.

The problem, as I said before, is that we have oligopolic oil companies controlling a VITAL commodity and through a lack of real incentives to compete, they find ways to earn tremendous profits at our expenses.

When gasoline price increases vastly outpace those of crude price and when gasoline price decreases lag behind those of crude, you have to look at the other cost factors. Unless taxes, marketing or distribution/refining costs have risen, profiteering is the only remaining explanation.

If the market will bear it the oil companies will swindle us. Our governments, however, do have the power to curb this, ESPECIALLY considering gas taxes are fixed.

Basic math does not support the 75-80% price point.

1 barrel of oil (205 liters) at a cost of $60 US (roughly $70.80 CAN - actually, REALLY roughly) works out to $0.345 per liter of oil. If the pump price is $0.95 per liter, the crude cost is about 33% of that. (Again, numbers are for demonstration only)

Still a ridiculous rip-off. The rest of your post is bang on.

[Moonbox]

Sorry. I wasn't clear in my last post. The vast majority of the cost for the OIL companies in bringing a litre to the pumps is from crude. What they don't tell you is that the oil companies own the entire process from drilling to refining to distribution, and they make profit on every step.

Petro Canada likes to tell us that only 3% of the retail price at the station is profit, but that's total horseshi* and even if it were true the whole process is so vertically integrated that the parent company is making giant margins on every preceding step.

There's massive profiteering going on right now. I hate the oil companies but I've invested my money with them. If you can't beat 'em...join em.... :S

Edited May 26, 2009 by Moonbox

[Wilber]

Petro Canada likes to tell us that only 3% of the retail price at the station is profit, but that's total horseshi* and even if it were true the whole process is so vertically integrated that the parent company is making giant margins on every preceding step.

3% is the station's profit, not the oil company's.

75-80% of the price of a litre of gasoline is from crude. As crude prices go up, the proportional costs of taxes, refining etc all go down.

Except for the GST component, it is charged on the whole ball of wax including the other taxes.

Next Sunday, CBC`s Passionate Eye is going to have a program called`Whatever happen to the Electric Car``Its about who killed the electric car program back in the 70-80`s. I wonder what the oil and gas companies are going to do if this time around if the electric car does take off with consumers? Where will that leave the price of gas? One question I do have on that is in Ontario, we have avery high debt on Hydro and if they bring out these cars that need plugging in, how is that going to help the reduce the need on hydro? Will it increase ones hydro bill and by how much?

Depends on who buys them, there are 15,000 new cars a day hitting the streets of Beijing, probably at least as many in Shanghai. Who knows for the rest of China. And then there is India. Widespread use of electric cars will do no more than stabilize oil consumption for the foreseeable future.