Automotive

How is no one outraged by the Gas Prices?

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  • Jul 18th, 2015 6:48 pm
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Feb 24, 2015
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Quentin5 wrote:
Jun 25th, 2015 3:14 am
About as impossible as gasoline costing the same at $60 vs $120/barrel
I'm really not sure why this is so hard to understand. If a restaurant's food cost half as much, would its prices decrease by half? No. The only way it could cut its prices in half would be if all its costs decreased by half. Rent, staff wages, utilities, everything. If all those things stay the same but the cost of food decreases by half, then perhaps it would cut its prices by 25% - but NOT 50%.
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retrothing wrote:
Jun 24th, 2015 11:35 pm
I work for a Canadian consumer electronics company, so I definitely agree with that sentiment! The question is *how* Canada can effectively diversify on a massive scale - we can't compete with Mexico on auto manufacturing costs, we can't compete with the US on aircraft manufacturing because of economies of scale. So how do we broaden our economy beyond oil, lumber and staffing American chain stores?
We have one of the highest number of accessibly priced universities, and a well educated population:

1. Business and financial services
2. engineering expertise
3. High tech
4. Pharma research¸
5. Medical research

the reason teh Us does well is that they hold the knowledge and expertise, yet the outsource the menial labor.

how did Canada survive in teh 80s and 90s when oil was 50$ a barrel?
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[IMG]http://i57.tinypic.com/w1d92w.jpg[/IMG]

Crude is easily half or more of the price of gas. If the price of crude drops by half, I expect anywhere from a 25 to 35 cent drop.

The US is not that different:[IMG]http://i60.tinypic.com/dmbqxu.jpg[/IMG]


What's happening is clear. Gasoline retailers and refiners (and not oil extractors) have raised their margin in an effort to clawback the savings from the drop in crude. Look at the razor thin refining margins in eastern Canada. My guess is that they pigging out at the trough before lean times return.
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WTI crude last year peaked at around 110 CAD; it's now about 72 CAD. So the price of oil dropped by about 35%, not 50%. This means you should expect the price of gas to drop by about 15-25%. The July 2014 price of gas in Canada was 1.35, and it's now averaging 1.18 - a drop of 13%. Not a huge difference, especially considering that June is generally the most costly month for gas, and demand for gas is higher when oil is 72 than when it is 110.
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Oct 26, 2003
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isn't crude traded on the global market? why is there difference in crude prices between provinces? due to transportation cost?
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tk1000 wrote:
Jun 25th, 2015 1:49 pm
Do you put crude in your car? :confused:
i'm responding to mr_rider's chart, the crude price portion is not even stable across the board
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divx wrote:
Jun 25th, 2015 1:54 pm
i'm responding to mr_rider's chart, the crude price portion is not even stable across the board
Transportation and source. There is no Energy East Pipeline yet to send AB crude to eastern refineries. Winnipeg west looks like western sources, Montreal east looks like offshore & import. Ontario's big refineries are Nanticoke, Sarnia, Mississauga, so all southern Ontario, and are probably using US oil?
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Mike15 wrote:
Jun 25th, 2015 2:03 pm
Transportation and source. There is no Energy East Pipeline yet to send AB crude to eastern refineries. Winnipeg west looks like western sources, Montreal east looks like offshore & import. Ontario's big refineries are Nanticoke, Sarnia, Mississauga, so all southern Ontario, and are probably using US oil?
the inefficiencies in this country is absolutely astounding.
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divx wrote:
Jun 25th, 2015 1:48 pm
isn't crude traded on the global market? why is there difference in crude prices between provinces? due to transportation cost?
all crude isnt the same. when you hear "oil price" quoted they are using a benchmark, but price is different depending on type and location. Oil sands oil is cheaper becuase refining cost is higher, but that oil doesn't go to eastern Canada. A lot of alberta's oil goes to thr USA, while a lot of oil used in eastern Canada is imported. ON gets some Alberta oil (via the USA) and some imported oil.

Note the crude and refining costs combined in the chart are quite close between provinces. The retail margin is far higher in the north where costs to operate anything are far higher. It all makes sesne, no conspiracy
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zoro69 wrote:
Jun 25th, 2015 2:19 pm
all crude isnt the same. when you hear "oil price" quoted they are using a benchmark, but price is different depending on type and location. Oil sands oil is cheaper becuase refining cost is higher, but that oil doesn't go to eastern Canada. A lot of alberta's oil goes to thr USA, while a lot of oil used in eastern Canada is imported. ON gets some Alberta oil (via the USA) and some imported oil.
eastern province can get cheap access to saudi oil, why is this even an issue?
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divx wrote:
Jun 25th, 2015 2:25 pm
eastern province can get cheap access to saudi oil, why is this even an issue?
saudi oil is more expensive then oil sands oil as it requires less refining to make gasoline. of ourse it has to be shipped rather then travel a pipeline. Hence thrre is so much tak of the need for more pipelines in canada so that alberta can get higher prices for oil.
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zoro69 wrote:
Jun 25th, 2015 2:30 pm
saudi oil is more expensive then oil sands oil as it requires less refining to make gasoline. of ourse it has to be shipped rather then travel a pipeline. Hence thrre is so much tak of the need for more pipelines in canada so that alberta can get higher prices for oil.
alberta is so rich even at such depressed market price, shouldn't they themselves invest in pipelines and refineries to make even more profit? what happened to all that business sense?
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justaskthescientician wrote:
Jun 25th, 2015 4:39 am
I'm really not sure why this is so hard to understand. If a restaurant's food cost half as much, would its prices decrease by half? No. The only way it could cut its prices in half would be if all its costs decreased by half. Rent, staff wages, utilities, everything. If all those things stay the same but the cost of food decreases by half, then perhaps it would cut its prices by 25% - but NOT 50%.
I'm impressed at the apologists for the oil companies, so the next time oil passes $100/barrel it will cost about $2/l and at $147/barrel it will approach $3 a liter. Since this is expected by your logic you will be happy to pay it. :facepalm:

Edit: I expect you will say it will only cost $2.50 at $147/barrel, as if that will make it all better
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
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divx wrote:
Jun 25th, 2015 2:32 pm
alberta is so rich even at such depressed market price, shouldn't they themselves invest in pipelines and refineries to make even more profit? what happened to all that business sense?
more corporate welfare
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
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Quentin5 wrote:
Jun 25th, 2015 2:34 pm
I'm impressed at the apologists for the oil companies, so the next time oil passes $100/barrel it will cost about $2/l and at $147/barrel it will approach $3 a liter. Since this is expected by your logic you will be happy to pay it. :facepalm:

Edit: I expect you will say it will only cost $2.50 at $147/barrel, as if that will make it all better
i'm not happy to pay high gas prices at all, gonna get EV at next available opportunity, looking good for 2016

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