Community Forums

Gerall · 08-26-2011, 01:40 PM

Funny here in Canada diesel is less expensive than gas. 122.9/litre for gas and 115.9 for diesel. Now I am not sure if diesel is right priced and we are getting screwed on gas, or if gas is right priced and we are getting a deal on diesel. With the oil companies who knows.

RustyJC · 08-26-2011, 01:48 PM

Quote:

Originally Posted by Gerall

Funny here in Canada diesel is less expensive than gas. 122.9/litre for gas and 115.9 for diesel.

What are your federal and provincial tax rates/litre for gasoline and diesel, respectively? Canada may be like Europe, where diesel is a favored fuel that is taxed at a preferential rate relative to gasoline to encourage diesel consumption. Conversely, in most states in the U.S., combined federal and state fuel taxes are higher for diesel than for gasoline which serves to discourage diesel consumption.

Rusty

Crabby Mike · 08-27-2011, 06:33 PM

Quote:

Originally Posted by SRT

That's funny, NOT. Around town here gas prices are identical except for Sam's Club and several independent stations. 25 miles away prices are 3-5¢ a gallon cheaper. No competition here.

I spent 20+ years as an oil market analyst for the Energy Information Administration, and this was always one of my "favorite" questions from the public. If all the stores in an area had the same price, people complained. If all the stores had different prices ... people complained.

In truth, either condition can reflect healthy competition. Every station's pricing includes consideration of its competitors. In some markets, one seller tends to set the bottom, and others will grudgingly match him, but not go lower. In others, there's a constant up-and-down price contest going on. Also, some sellers, due to location, brand, etc., are able to set their prices a few cents over others and still be "competitive."

My answer was always "shop around." Many drivers are creatures of habit, and station owners know this. They realize that a few cents won't make much difference to those drivers. But if enough drivers vote with their wallets, the less-competitive sellers will have to adjust.

Midniteoyl · 08-27-2011, 08:54 PM

Most places the price spread is set by law.. You are not allowed to price less than 7% above wholesale (or 3%, or 6%, etc). Now, given that the guy down the street could fill up the tanks tomorrow morn at a cheaper price, say, there are also laws that say one station in a given region cannot be priced more than 2 cents lower than the others (or 1 or 3). So owners need to price according to what they paid, what they can afford, and what the others are doing... really messed up..

johnmark · 08-27-2011, 09:06 PM

This has been an interesting and informative thread. I started it for an answer to why diesel is usually $.30 per gallon higher than regular gasoline. I got some answers to this but I am still wondering what the real reason is. I have read, "greed", taking the sulfer out, etc.

Crabby Mike · 08-27-2011, 09:26 PM

Quote:

Originally Posted by johnmark

This has been an interesting and informative thread. I started it for an answer to why diesel is usually $.30 per gallon higher than regular gasoline. I got some answers to this but I am still wondering what the real reason is. I have read, "greed", taking the sulfer out, etc.

Yeah, I guess we did drift off topic a bit. The answer to your original question is ... drum roll ... "supply and demand." Yes, seriously -- it doesn't matter which fuel "costs" more to make, it's the balance of how much is available vs. how much is needed. While we in the U.S. focus on gasoline, the rest of the world runs mostly on diesel, which accounts for the import/export flows. Also, counter to a comment earlier, U.S. refineries make far more gasoline than diesel (about 46% vs. 28% of refinery inputs). Add in the desulfurization cost and the higher taxes, and there you are. As to greed, why would that be more of an issue with diesel than gasoline?

SRT · 08-28-2011, 12:52 PM

Quote:

Originally Posted by Crabby Mike

I spent 20+ years as an oil market analyst for the Energy Information Administration, and this was always one of my "favorite" questions from the public. If all the stores in an area had the same price, people complained. If all the stores had different prices ... people complained.

In truth, either condition can reflect healthy competition. Every station's pricing includes consideration of its competitors. In some markets, one seller tends to set the bottom, and others will grudgingly match him, but not go lower. In others, there's a constant up-and-down price contest going on. Also, some sellers, due to location, brand, etc., are able to set their prices a few cents over others and still be "competitive."

My answer was always "shop around." Many drivers are creatures of habit, and station owners know this. They realize that a few cents won't make much difference to those drivers. But if enough drivers vote with their wallets, the less-competitive sellers will have to adjust.

Several times the state investigated but found that everything was on the up and up. But then I can go about 20 miles to the west or north and find cheaper gas prices. The casino gas station in Grand Portage, MN was cheaper then here in Duluth. But I buy most of my gasoline at the local Sam's Club where it can be 5-10¢ a gallon cheaper.