Why are gas prices going up?

[bush_cheney2004]

There is a solution when the gas wars are the station themselves. Just go to the lower priced station. Of course, this is easier to do in a small city or town, I don't how you could do it in a city like Toronto.

Like this.....

http://www.torontogasprices.com/

[Zachary Young]

Can you imagine how cheap gas would be if we didn't tax the tar out of it? Or if we didn't bow down to environmentalist lobbies that have an anti-energy agenda? Apparently even the windmills aren't okay with them because they disrupt the migratory patterns of birds! Get real folks - this is the 21st century. I personally am a bit of a minimalist. I don't drive a car, I try not to consume a lot of things, but people seem to enjoy living the life styles they do and there's nothing wrong with that, but that means we have huge energy needs and we need to allow the market to supply these needs. Get rid of the taxes and regulations involved here, let the market does what it does best and let's stop bending the gas consumers over at the pump. Gas prices would probably be half what they are currently if not less if it weren't for the government and high taxes and regulations involved here, to say nothing of the idiocy of ethanol and other foolish subsidies towards alternative energies. Eventually we may need to move away from fossil fuels, but it should be the market which decides which other form of energy is efficient, not lobbyists and politicians who are a little more interested in their re-election than which fuel actually makes economic sense.

[guyser]

That's why we still have only a few banks, a few insurance companies

Financial Services Commission has 26+ pages of companies offering Insurance in Ontario alone. How many do we need?

With the banks, ever wonder why ING is an internet bank in Canada, with no storefronts?

Because they can make a ton of money by not having a physical branch.Any other reason is folly.

[Wild Bill]

Financial Services Commission has 26+ pages of companies offering Insurance in Ontario alone. How many do we need?

Because they can make a ton of money by not having a physical branch.Any other reason is folly.

How many are true insurance companies and how many are really smaller brokers with all their policies actually underwritten by a larger firm?

It's the same with gas companies. Lots of small 'independents' like Pioneer or whoever but they don't have their own refineries. They buy from the same small group of Big Names, like Sunoco or Esso.

As for ING, I guess that means all the other banks are about to close their storefronts, now that ING has shown them the way. You can't have it both ways, Guyser.

[guyser]

How many are true insurance companies and how many are really smaller brokers with all their policies actually underwritten by a larger firm?

Most are true insurance companies. They all have to follow the same rules .

Last I heard, 160 companies offering auto insurance in Ontario.

Small brokers cant afford to become an auto insurance company.

It's the same with gas companies. Lots of small 'independents' like Pioneer or whoever but they don't have their own refineries. They buy from the same small group of Big Names, like Sunoco or Esso.

As for ING, I guess that means all the other banks are about to close their storefronts, now that ING has shown them the way. You can't have it both ways, Guyser.

I uh was merely stating that your belief was incorrect, not that I stated I wanted it any way nor another.

Edited December 7, 2010 by guyser

[Bryan]

Interesting to see how much discrepancy there is in gas prices by region. I'm not seeing the kinds of prices you guys are talking about here in Winnipeg. The stations I go to are mostly selling in the 91-95 cents/litre range.

[Pliny]

Financial Services Commission has 26+ pages of companies offering Insurance in Ontario alone. How many do we need?

Those are independent insurance agents not insurance companies.

[guyser]

Those are independent insurance agents not insurance companies.

Look again, fopr the most part they are ins companies.

[Pliny]

Interesting to see how much discrepancy there is in gas prices by region. I'm not seeing the kinds of prices you guys are talking about here in Winnipeg. The stations I go to are mostly selling in the 91-95 cents/litre range.

I wonder if prices actually do go up in the summer because of increased consumption? It seems consumption would be fairly high on the prairies in winter with people warming up their vehicles before they go anywhere.

[Pliny]

Look again, fopr the most part they are ins companies.

Insurance companies are the companies that do the actual underwriting. There aren't that many of them.

The small companies you see in the yellow pages couldn't afford to underwrite million dollar policies.

[guyser]

Insurance companies are the companies that do the actual underwriting. There aren't that many of them.

The small companies you see in the yellow pages couldn't afford to underwrite million dollar policies.

There are plenty of them and million $ policies has nothing to do with anything.

Im afraid you are misinformed.

[Pliny]

In answer to the OP question though I have to go with inflation.

Over the long run it is mostly inflation that takes oil prices higher. There are other influences of course such as market supply and demand or government price controls. These are constantly influencing the price.

It has been said that the American dollar is backed by oil, since oil is generally marketed in US dollars.

This would mean that, yes; the reason for an increase in prices is the drop in the dollar's value.

Contrary to what is promoted, we are not in a period of deflation. We are in a period of downward price corrections in the market. Governments are stimulating the economy with new money, termed "quantitative easing", this is inflation. It is an attempt to reverse downward price corrections. Because government policy has always been one of inflation how can it be that we entered into a period of deflation. Unfortunately, whoever gets to use the new money first has a benefit in buying at the prices prior to their rise, and we will inexorably see their rise with the amount of quantitative easing the US is doing.

We also cannot deny oil is an oligarchic industry and there is perhaps some price fixing, perhaps in the form of regulating supply, as a result but I think price is mostly governed by the open market.

Edited December 8, 2010 by Pliny

[Pliny]

There are plenty of them and million $ policies has nothing to do with anything.

Im afraid you are misinformed.

Allright.

[Smallc]

Gas cost my parents (who own a retail business) 98.9 yesterday. It's been at 92.9 - 95.9 all summer and fall, and it's gone up (this is in rural Manitoba).

[guyser]

Gas cost my parents (who own a retail business) 98.9 yesterday. It's been at 92.9 - 95.9 all summer and fall, and it's gone up (this is in rural Manitoba).

1.112 per litre, yet I can go 2 hrs north and get it at 1.01. No idea why .

[Oleg Bach]

Gas is the ultimate drug. It is going up because the drug dealers can do what they please...simple as that.

[Smallc]

1.112 per litre, yet I can go 2 hrs north and get it at 1.01. No idea why .

It's simply about the price that the gas companies charge the service stations. Why they charge so much more in some places, I have no idea.

[blueblood]

1.112 per litre, yet I can go 2 hrs north and get it at 1.01. No idea why .

From what I've heard, profit margins are tight at gas stations. In a small town, the gas station doubles as a 7-11/macs and those stores selling other things than gas do pretty well. Also small town (in farm country) sells bulk fuel on top of it. In a city, I don't know if those gas stations sell as much other products as gasoline. I've also heard that its the other products sold that can make or break gas stations. Then there is the cost of inventory, the city gas station can turn it over quickly and can get away with charging more, whereas the small town can't. Also to note, the small town had better be on a route that has good access to truck traffic, so the cost of delivering gas to the station isn't too great.

That's my opinion, I'll defer to SmallC to fill in the gaps or correct me as this is his bag.

[Smallc]

From what I've heard, profit margins are tight at gas stations. In a small town, the gas station doubles as a 7-11/macs and those stores selling other things than gas do pretty well. Also small town (in farm country) sells bulk fuel on top of it. In a city, I don't know if those gas stations sell as much other products as gasoline. I've also heard that its the other products sold that can make or break gas stations. Then there is the cost of inventory, the city gas station can turn it over quickly and can get away with charging more, whereas the small town can't. Also to note, the small town had better be on a route that has good access to truck traffic, so the cost of delivering gas to the station isn't too great.

That's my opinion, I'll defer to SmallC to fill in the gaps or correct me as this is his bag.

Well...my family (I'm considering buying the business right now...I know shocker eh) is in a bit of a unique situation given the area, as I'm sure you may be aware. Um, because of the amount of product that we....give away (one way or another), we have to make a bit more on gas, and we probably still don't break even. When a pump breaks, you have to get someone from Brandon, and you're looking at $1000 just for the trip. It's similar if other non gas equipment breaks (a 2 year old freezer just broke - $1600). We sell regular gasoline, premium gasoline, dyed gasoline, diesel fuel, and dyed diesel. The most money is made on diesel fuel, because it's stolen and borrowed less, and because of the fleet customers (mostly school busses now that ambulances have switched to gas). We have to charge a bit more because of the current contract we're locked into. We go through a great deal of product, about 1M litres of gasoline every year. That made us the highest selling station in the entire gas company.

Oh, and if we had to live on just gas, we'd starve. You make a few cents a litre, so the margin is less than 10%. Other things can range from that 10% (alcohol in Manitoba, and cigarettes) to 50% (hardware). The higher margin product is usually stuff with less turnover, so the increased profit is really eaten up by the fact that it's taking up valuable floor space. We do okay....depending on the year, between $1.5M and $2.2M in sales. We have a lower profit margin than we should though...because of the unique situation. It sits at less than 10%, when it should be somewhere between 10 and 15%. Retail isn't an easy business.

Edited December 9, 2010 by Smallc

[blueblood]

Well...my family (I'm considering buying the business right now...I know shocker eh) is in a bit of a unique situation given the area, as I'm sure you may be aware. Um, because of the amount of product that we....give away (one way or another), we have to make a bit more on gas, and we probably still don't break even. When a pump breaks, you have to get someone from Brandon, and you're looking at $1000 just for the trip. It's similar if other non gas equipment breaks (a 2 year old freezer just broke - $1600). We sell regular gasoline, premium gasoline, dyed gasoline, diesel fuel, and dyed diesel. The most money is made on diesel fuel, because it's stolen and borrowed less, and because of the fleet customers (mostly school busses now that ambulances have switched to gas). We have to charge a bit more because of the current contract we're locked into. We go through a great deal of product, about 1M litres of gasoline every year. That made us the highest selling station in the entire gas company.

Oh, and if we had to live on just gas, we'd starve. You make a few cents a litre, so the margin is less than 10%. Other things can range from that 10% (alcohol in Manitoba, and cigarettes) to 50% (hardware). The higher margin product is usually stuff with less turnover, so the increased profit is really eaten up by the fact that it's taking up valuable floor space. We do okay....depending on the year, between $1.5M and $2.2M in sales. We have a lower profit margin than we should though...because of the unique situation. It sits at less than 10%, when it should be somewhere between 10 and 15%. Retail isn't an easy business.

That's about what I was thinking, except for the greater amt. of gas sold at your particular gas station. Your "unique situation" might be a blessing in disguise because the Co-op chain I don't think would set up shop in that area of the province, and Co-op has a knack of doing well against franchise owners.

[Smallc]

That's about what I was thinking, except for the greater amt. of gas sold at your particular gas station.

Well, I was careful to say go through. We lose a lot of gas to non payment more than theft.

[bloodyminded]

Well, I was careful to say go through. We lose a lot of gas to non payment more than theft.

Just as a note of interest (I stress this so it's not read as a dispute, which it isn't), a local Constable informed me that the police have concluded that the vast majority of fuel-station "thefts" are accidental, the product of absent-mindedness. It's not difficult to see how this should be so, particularly with the rise of multi-payment options.

Of course, that has no objective bearing on the fact that your family unfairly loses money. That is what it is, of course.

[Smallc]

It's not like that. It's really my dad's fault. He's overly generous with some people. There are people that owe us very large sums of money. He feels sorry for them (even though for many of them, it's their bad choices that put them in a bad situation every month), and so he gives them what they need. I should say though that for the most part, that's recently stopped for things like tobacco and gasoline. Those aren't really necessities, especially in an area where there are very few jobs and so about 90% of the population is on social assistance (not in our immediate community, but one nearby). My family owns the only business (other than hunting and fishing lodges) in the entire area.

[bloodyminded]

It's not like that. It's really my dad's fault. He's overly generous with some people. There are people that owe us very large sums of money. He feels sorry for them (even though for many of them, it's their bad choices that put them in a bad situation every month), and so he gives them what they need. I should say though that for the most part, that's recently stopped for things like tobacco and gasoline. Those aren't really necessities, especially in an area where there are very few jobs and so about 90% of the population is on social assistance (not in our immediate community, but one nearby). My family owns the only business (other than hunting and fishing lodges) in the entire area.

Ah.

Well, sure...these sorts of circumstances put compassionate people into sometimes difficult situations.

[Wilber]

Just as a note of interest (I stress this so it's not read as a dispute, which it isn't), a local Constable informed me that the police have concluded that the vast majority of fuel-station "thefts" are accidental, the product of absent-mindedness. It's not difficult to see how this should be so, particularly with the rise of multi-payment options.

Of course, that has no objective bearing on the fact that your family unfairly loses money. That is what it is, of course.

Not in BC, you either prepay or use pay at the pump. That's the law.