Automotive

How is no one outraged by the Gas Prices?

  • Last Updated:
  • Jul 18th, 2015 6:48 pm
Tags:
None
Deal Fanatic
User avatar
Jun 19, 2001
8078 posts
1762 upvotes
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?
They are trying to build pipelines, do you ever read the news?! Keystone and northern gateway will be built with private money if governments ever allow it. Reversing line 9 is in the works
Deal Expert
User avatar
Feb 8, 2014
16081 posts
5365 upvotes
divx wrote:
Jun 25th, 2015 2:36 pm
i'm not happy to pay high gas prices at all, gonna get EV at next available opportunity, looking good for 2016
i agree, i would love to get a tesla model 3
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
Deal Addict
Aug 10, 2005
1213 posts
103 upvotes
Vaughan, On
zoro69 wrote:
Jun 25th, 2015 2:37 pm
They are trying to build pipelines, do you ever read the news?! Keystone and northern gateway will be built with private money if governments ever allow it. Reversing line 9 is in the works
Line 9 reverse is put on halt due to hiipies/environmentalists *strong* opposition. The gov demands enbridge to put a shutoff valve at every lake pipe 9 runs, enbridge deems a mission impossible, line 9 reverse halted… currently it only reaches Mississauga.
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
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
It works both ways. If oil doubles but none of the other costs involved in retail gas sales increases, then you would expect prices at the pump to increase by 50%, not the expected 100%.

Then there's other economic factors. Such as if oil is pricy and thus gas should be pricy, then people will minimize their fuel usage. This means less demand for gas. So prices lower. Everyone along the way accepts lower margins because the nominal price of gas is higher, so you can accept a lower percent.

And then there would be more pressure on the government to change its taxation too.

So all things considered, a doubling of crude should translate into a 30% or so increase in gas prices.

What clearly makes us apologists different is our understanding of economics.
Deal Expert
User avatar
Feb 8, 2014
16081 posts
5365 upvotes
justaskthescientician wrote:
Jun 25th, 2015 9:16 pm
It works both ways. If oil doubles but none of the other costs involved in retail gas sales increases, then you would expect prices at the pump to increase by 50%, not the expected 100%.

Then there's other economic factors. Such as if oil is pricy and thus gas should be pricy, then people will minimize their fuel usage. This means less demand for gas. So prices lower. Everyone along the way accepts lower margins because the nominal price of gas is higher, so you can accept a lower percent.

And then there would be more pressure on the government to change its taxation too.

So all things considered, a doubling of crude should translate into a 30% or so increase in gas prices.

What clearly makes us apologists different is our understanding of economics.
If you can explain away your naiveness good for you, but simple proof is gas prices a few months ago at about the same oil price
What yous saying is oil did us a favour by dropping suddenly exactly when it did because fixed costs were rising at the same pace oil was dropping and if oil had stayed at its price last year we would be paying $2 a liter today. So when oil gets to $100 again we should be paying well over $2.00 a liter because all the increase will be because oil went back to its previous price plus the future increase in fixed costs which "should" rise at exactly the same pace as oil again.
Your username as the scientician is eerily accurate :D
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
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.

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
This is correct. Middle East oil is much easier to refine than oil sands and Alberta conventional oil. As a result, ME oil sells at a premium, and it has to be transported to refineries in Saint John, Montreal, and Sarnia. So the total cost of crude, including transport, for Eastern and Central Canada is higher than for Western Canada, but the refining costs are much lower.

Much of the reason for differences across Canada is taxes.
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
Quentin5 wrote:
Jun 25th, 2015 9:21 pm
If you can explain away your naiveness good for you, but simple proof is gas prices a few months ago at about the same oil price
What yous saying is oil did us a favour by dropping suddenly exactly when it did because fixed costs were rising at the same pace oil was dropping and if oil had stayed at its price last year we would be paying $2 a liter today. So when oil gets to $100 again we should be paying about $2.00 a liter because all the increase will be because oil went back to its previous price plus the future increase in fixed costs which "should" rise at exactly the same pace as oil again.
Being able to critically assess the reality is not explaining away naivety. Not considering economics in a discussion of economics is stupidity.

Gas is always highest in June. There's higher demand on gas, so even though crude is about the same, gas prices should be higher.
Deal Expert
User avatar
Feb 8, 2014
16081 posts
5365 upvotes
justaskthescientician wrote:
Jun 25th, 2015 9:28 pm
Being able to critically assess the reality is not explaining away naivety. Not considering economics in a discussion of economics is stupidity.

Gas is always highest in June. There's higher demand on gas, so even though crude is about the same, gas prices should be higher.
So refinery output and utilization is higher then higher demand years?
So if we would be paying $2 a liter if oil had not dropped (33% more then when oil cost $147/barrel) we should be paying $3-4 a liter in the next year or two?
The math simply does not add up.
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
Deal Expert
Jun 30, 2006
17253 posts
5081 upvotes
Toronto
$120.9 today. We are getting robbed big time.
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
Quentin5 wrote:
Jun 25th, 2015 9:21 pm
What yous saying is oil did us a favour by dropping suddenly exactly when it did because fixed costs were rising at the same pace oil was dropping and if oil had stayed at its price last year we would be paying $2 a liter today. So when oil gets to $100 again we should be paying well over $2.00 a liter because all the increase will be because oil went back to its previous price plus the future increase in fixed costs which "should" rise at exactly the same pace as oil again.
Your username as the scientician is eerily accurate :D
Well, let's see. I said if crude doubles, gas should increase by about 30%. So if it increases 66%, then perhaps gas prices should increase by about 20%. 20% on 1.18/L is 1.42/L, not 2.00. Try again.
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
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?
Alberta is in the middle of nowhere. Crude is much more easily transportable than refined products, so it's best to just transport crude and refine it close to retailers. Besides, there are lots of undercapacity refineries in the US. It doesn't make sense to build new ones when existing ones can handle more crude.

As for more pipelines, that's exactly what they're trying for, subject to regulatory approval.
Deal Expert
User avatar
Feb 8, 2014
16081 posts
5365 upvotes
justaskthescientician wrote:
Jun 25th, 2015 9:34 pm
Well, let's see. I said if crude doubles, gas should increase by about 30%. So if it increases 66%, then perhaps gas prices should increase by about 20%. 20% on 1.18/L is 1.42/L, not 2.00. Try again.
Lets assume your 30% is correct, if oil doubles todays fuel would cost $1.56/L (1.2 x 130%), I dont remember paying that at $147/barrel.
In addition if its only 30% of the cost of gasoline your saying if oil cost zero gas would still cost 84 cents a liter, we paid a lot less then that when oil cost $30 a barrel when the recession started. If oil cost zero then we would have paid even less.
It seems we are the food in the food chain, or least our dollars and brain cells.
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...
Deal Addict
User avatar
Feb 24, 2015
1032 posts
224 upvotes
Fort Mac, AB/Lambton…
Quentin5 wrote:
Jun 25th, 2015 9:45 pm
Lets assume your 30% is correct, if oil doubles todays fuel would cost $1.69/L (1.2 x 130%), I dont remember paying that at $147/barrel.
In addition if its only 30% of the cost of gasoline your saying if oil cost zero gas would still cost 84 cents a liter, we paid a lot less then that when oil cost $30 a barrel when the recession started. If oil cost zero then we would have paid even less.
It seems we are the food in the food chain, or least our dollars and brain cells.
Your problem is that you're not able to make fair comparisons. At 147/barrel, CAD and USD were near parity. Now it takes 1.24 CAD to purchase 1.00 USD. So whatever you expected to pay for gas at 147, multiply that by 1.24. At 147, you expect to pay 1.45... so 1.45 x 1.24 = 1.80/L. Try again.

EDIT: I responded in haste. Crude is only half the cost of gas, and it's the only element commonly provided in USD. So that USD is 24% higher now, gas should be about ~12% higher. So 1.45 x 1.12 = 1.62/L.
Moderator
User avatar
Sep 21, 2004
10049 posts
4068 upvotes
Calgary
divx wrote:
Jun 25th, 2015 2:36 pm
i'm not happy to pay high gas prices at all, gonna get EV at next available opportunity, looking good for 2016
I'm in the same boat.
Looks Tesla Model 3 and GM Bolt will be big sellers in 2017/2018 onward.
Deal Expert
User avatar
Feb 8, 2014
16081 posts
5365 upvotes
justaskthescientician wrote:
Jun 25th, 2015 9:51 pm
Your problem is that you're not able to make fair comparisons. At 147/barrel, CAD and USD were near parity. Now it takes 1.24 CAD to purchase 1.00 USD. So whatever you expected to pay for gas at 147, multiply that by 1.24. At 147, you expect to pay 1.45... so 1.45 x 1.24 = 1.80/L. Try again.

EDIT: I responded in haste. Crude is only half the cost of gas, and it's the only element commonly provided in USD. So that USD is 24% higher now, gas should be about ~12% higher. So 1.45 x 1.12 = 1.62/L.
Explain this genius, the experts disagree with the scientician
http://www.cbc.ca/news/business/gas-pri ... -1.3120038
In Japan, the hand can be used like a knife.
But this method doesn't work with a tomato...

Top