New Gasoline Tax in Budget???

[Sundancefisher]

Originally Posted by The Elkster

I'd be curious to know what criteria they were using on some of these studies regarding market investigations. I suspect their definition of collusion was quite specific and very limited in scope. Gov't doesn't make a habit of finding problems with a system that is making them a crap load of money.

Ahhh. The conspiracy theory. Can't argue against tin foil. Useful and shiny.

In all seriousness they look long and hard. People pay hefty fines if caught. They would love that money. When competition is fierce and fast people miss it.

[Talking moose]

Originally Posted by Sundancefisher

What on earth would a freakishly low gas price help a gas station sell and still make a profit? Whether independent or not. Yes...someone who owns a franchise with a Petro Canada station attached individually does not set the price.

I gave a simply gave an example of how prices change. There is fierce competition amongst retailers.

Perhaps low fuel prices get them in the door to buy high mark up items that are sold with in........that's where the money is.

[Sundancefisher]

Oh I'm sure you could, I'd appreciate it if you tried answering the question though. What of the many many factors you listed acountant for the increased frequency of changes and the higher rate of change in local prices? Look at the graph, you don't see that saw tooth pattern in other Canadian markets, you don't see it in Chicago or Milwakee either. The overnight 10 cent swings don't make sense!

I can understand how the relative size of the market influences things but the rest of that spiel is strikes me as nothing but hand waving. I am not claiming an uncompetitive climate (short of outright collusion) is the only explanation but it is the only one I can think of so far.[/QUOTE]

You are talking about a massively complex question with no data other than a simple graph.

Speculation doesn't work. All those points mentioned will impact price. Some with bigger effects than others. Some happening at the same time and some at different times. The two lines track very well between two very different markets. Very surprising how similar the trends.

[79ford]

Originally Posted by Sundancefisher

If McDonalds could sell it for more they would. Competition puts limits. Just like there is a reason why gasoline is not $3.00/litre here.

People use more when it is cheap and use less when it is expensive. When they use less the price comes down. When they use more the price goes up. In high demand periods companies can and should and do charge more.

What you said above is true. Refining limits have occured because of a lack of new ones being built. Notly should approve one on the border with Saskatchewan. Less nimby concerns for regulators in Alberta. Maybe then one could be build.

I hope the royalty review includes something that incentivizes some brown field expansion. The general public doesnt notice and it doesnt take a tonne of room to add alot of new capacity.

[Sundancefisher]

Originally Posted by Talking moose

Perhaps low fuel prices get them in the door to buy high mark up items that are sold with in........that's where the money is.

So they jack up chocolate bars and windshield fluid to trick people into paying more than Walmart but then hope people don't just take the gasoline savings and run.

There can be lost leaders but unless you are trying to get more volume through your store dropping prices doesn't help much. Most stations need a store to make money.

[Sundancefisher]

Originally Posted by 79ford

I hope the royalty review includes something that incentivizes some brown field expansion. The general public doesnt notice and it doesnt take a tonne of room to add alot of new capacity.

Can't see the NDP encouraging green house gas increases by building refineries.

[ImpartialObserver]

Originally Posted by Sundancefisher

Again. You don't even understand the definition of collusion. It would stop your comments in their tracts.

If a burger place raised there prices the others would quick if needed to maintain customer volume in one direction and profitability in the other. Business is not the lemonade stand you had as a child.

You just said competition keeps mcDonald's from raising their prices, now your telling me that all others would raise their prices also.

[The Elkster]

There at tonnes of stations but only a few suppliers. At minimum there may not be legally defined collusion going on but there is certainly a serious competition issue. The refiners hold all the cards. They have a limited supply and they sell it all no problem. As such there is no need of competing for market share. Their only interest is maximizing return on their limited supply. They aren't stupid. What does a refiner gain from undercutting the next guy? And another important point is that actual retail margins on gas is very small so right from the get go the suppliers really control the price and retailers short of taking a loss are handcuffed by that and accepting their meager margins. Retailers do not have a 50% margin to price compete on.

Here is a link to some discussion on gas price margins. Not a new article but nothing has changed in the last few years. It gives a sense of just how much of the price is dictatable by retailers. Margins as low as 3.5C per liter.

http://www.canada.com/story_print.ht...6-4b6e0c978120

Is it a coincidence that the price variance in a given area is always within that retailer margin? Hmmmm What could that be saying?

[Sundancefisher]

Originally Posted by The Elkster

There at tonnes of stations but only a few suppliers. At minimum there may not be legally defined collusion going on but there is certainly a serious competition issue. The refiners hold all the cards. They have a limited supply and they sell it all no problem. As such there is no need of competing for market share. Their only interest is maximizing return on their limited supply. They aren't stupid. What does a refiner gain from undercutting the next guy? And another important point is that actual retail margins on gas is very small so right from the get go the suppliers really control the price and retailers short of taking a loss are handcuffed by that and accepting their meager margins. Retailers do not have a 50% margin to price compete on.

Here is a link to some discussion on gas price margins. Not a new article but nothing has changed in the last few years. It gives a sense of just how much of the price is dictatable by retailers. Margins as low as 3.5C per liter.

http://www.canada.com/story_print.ht...6-4b6e0c978120

Is it a coincidence that the price variance in a given area is always within that retailer margin? Hmmmm What could that be saying?

Yes. A limited number of refiners set their plans on what to refine. Commodity pricing sets the prices based upon supply and demand.

If refiners are making such a massive and unfair profit...build yourself one. No one else is really because simply there is not enough profit for the cost and expense. While margins are higher now...some years they do poorly. A refinery is not a license to make money like you assert.

When something breaks it can costs hundreds of millions to fix. That is after the billions to build.

[Sundancefisher]

Originally Posted by ImpartialObserver

You just said competition keeps mcDonald's from raising their prices, now your telling me that all others would raise their prices also.

Please take a business course. You are not grasping supply and demand principles.

[The Elkster]

Originally Posted by Sundancefisher

Yes. A limited number of refiners set their plans on what to refine. Commodity pricing sets the prices based upon supply and demand.

If refiners are making such a massive and unfair profit...build yourself one. No one else is really because simply there is not enough profit for the cost and expense. While margins are higher now...some years they do poorly. A refinery is not a license to make money like you assert.

When something breaks it can costs hundreds of millions to fix. That is after the billions to build.

I never once said a refinery is a license to make money. But they do control pricing regardless. The gasoline and diesel market is not run like a true free market system. Most of the current refineries are long ago paid for and that is just another competition killer. They certainly have continuing costs but those are minor in comparison to a new build at todays prices and environmental regs. They know darn well they have no fear of someone else coming in an dropping capital on a new refinery (other than a gov't backed project). Whether that is good or bad is all debatable. Higher prices lead to more supply and if we are deemed to need more supply then higher prices are required. C'est la vie.

I will say this much though. If the gov't ever got involved in starting a new plant the first one's to find reason to torpedo it will be the existing refinery owners. Oh the howls you'll hear as they see their margins at risk. I mean that happens now any time the gov't talks about getting involved in the game. You think a company cares about a gov't losing taxpayers money? Hell NO. They care about competition plain and simple.

[rugatika]

So if the fix is in, and they are colluding to keep prices high...what makes gas prices go down? Not very bright to collude to lower gas prices.

Last week I was paying 90cents a litre, now I'm at around 98 I think. It used to be well over a buck. These evil geniuses got the 3 stooges doing their price fixing or what?

[The Elkster]

Originally Posted by rugatika

So if the fix is in, and they are colluding to keep prices high...what makes gas prices go down? Not very bright to collude to lower gas prices.

Last week I was paying 90cents a litre, now I'm at around 98 I think. It used to be well over a buck. These evil geniuses got the 3 stooges doing their price fixing or what?

If profit margin gets too high then it encourages competition. Keep up will ya.

[rugatika]

Originally Posted by The Elkster

If profit margin gets too high then it encourages competition. Keep up will ya.

So they are self regulating their own prices to keep them at affordable levels for the consumer while still making enough money for themselves, but not allowing profit levels to get to such a point that it would encourage new entrants into the market? Is that what you're saying?

[Talking moose]

Originally Posted by rugatika

So they are self regulating their own prices to keep them at affordable levels for the consumer while still making enough money for themselves, but not allowing profit levels to get to such a point that it would encourage new entrants into the market? Is that what you're saying?

Makes sense.

[The Elkster]

Originally Posted by rugatika

So they are self regulating their own prices to keep them at affordable levels for the consumer while still making enough money for themselves, but not allowing profit levels to get to such a point that it would encourage new entrants into the market? Is that what you're saying?

Pretty much. Its a fine line on whether that should be okay or not. Ultimately people are paying more (long term) by companies taking out the peaks that'd limit competition and drive down prices but at the same time someone could argue that is free market...kinda.

I think the important question is whether the free market works for items that are a basic need for living. Free market works totally different for something truly optional like a game console that people can opt not to buy Vs something that people obviously need to function at a basic level in society like food, water, shelter, mobility to get to a job to pay for the aforementioned.

[rugatika]

If prices are so low that profit levels aren't high enough to make anyone else want to enter the market, then how much lower do you want the prices?

And there are lots of alternatives to gasoline and natural gas. Solar power, geothermal heating, electric cars, or even driving really small cars that get phenomenal mileage are all options to "high" gas prices.

[Badgerbadger]

Guys, guys, relax.

It's entirely my fault. I was trying to drive on fumes until the price went down, but it didn't. Filled up to the brim the other day, and I see prices are down to 95 cent area again.

You should be good for another week. I'll let you know when I'm on the last quarter, next time.

[Sundancefisher]

Originally Posted by The Elkster

I never once said a refinery is a license to make money. But they do control pricing regardless. The gasoline and diesel market is not run like a true free market system. Most of the current refineries are long ago paid for and that is just another competition killer. They certainly have continuing costs but those are minor in comparison to a new build at todays prices and environmental regs. They know darn well they have no fear of someone else coming in an dropping capital on a new refinery (other than a gov't backed project). Whether that is good or bad is all debatable. Higher prices lead to more supply and if we are deemed to need more supply then higher prices are required. C'est la vie.

I will say this much though. If the gov't ever got involved in starting a new plant the first one's to find reason to torpedo it will be the existing refinery owners. Oh the howls you'll hear as they see their margins at risk. I mean that happens now any time the gov't talks about getting involved in the game. You think a company cares about a gov't losing taxpayers money? Hell NO. They care about competition plain and simple.

So here is who sets the gasoline prices. http://www.bloomberg.com/energy A commodity trading listing

Everyone should read this prior to posting. http://canadianfuels.ca/userfiles/fi...al%20ENG-1.pdf

All refined products are traded commodities. Refiners and oil companies don't set prices.

FYI

A commodity is traded in a market similar to a stock market set up. No one can control it.

[JustMe]

Originally Posted by rugatika

If prices are so low that profit levels aren't high enough to make anyone else want to enter the market, then how much lower do you want the prices?



And there are lots of alternatives to gasoline and natural gas. Solar power, geothermal heating, electric cars, or even driving really small cars that get phenomenal mileage are all options to "high" gas prices.

How you going to transport freight? Anti gravity vessels? Come on guys, be realistic. Fuel costs affect more than private cars. High fuel costs drive up prices of nearly every commodity.

[Purple Farmer]

Originally Posted by JustMe

How you going to transport freight? Anti gravity vessels? Come on guys, be realistic. Fuel costs affect more than private cars. High fuel costs drive up prices of nearly every commodity.

I think everyone else in the world knows this, it appears you only just learnt that an essential input increasing in price would make the end product more expensive.

[rugatika]

Originally Posted by JustMe

How you going to transport freight? Anti gravity vessels? Come on guys, be realistic. Fuel costs affect more than private cars. High fuel costs drive up prices of nearly every commodity.

So what's your point? That using gasoline and diesel are the most cost effective means of transporting goods?

[Bushleague]

Originally Posted by Sundancefisher

Yup. Another freaking trolling effort with no respect for all the problems compounded with an entire lack of knowledge on the facts.

No ability to stand up and back up their troll.

Just whining hoping for blogging attention.

I dunno man, the last time oil was this low we were paying what, 70-80 cents a liter tops? Now we pay 1.09, the price of oil has dipped to almost a third of what its been in the last few years and the price of gasoline has barely gone down 25% on a good day and you want to defend that? Despite the oil companies still obviously making quite a bit of money at the pumps, we still get laid off and wage cuts.

Keep fighting the good fight brother, I suspect you are something of a one man army though.

[79ford]

Originally Posted by Sundancefisher

So here is who sets the gasoline prices. http://www.bloomberg.com/energy A commodity trading listing

Everyone should read this prior to posting. http://canadianfuels.ca/userfiles/fi...al%20ENG-1.pdf

All refined products are traded commodities. Refiners and oil companies don't set prices.

FYI

A commodity is traded in a market similar to a stock market set up. No one can control it.

That is relatively false, refiners set a 'rack price', it is based on percieved market demand and inventories. Gasoline is expensive right now after a rough summer for refiners, most are still licking their wounds after all the stuff that went wrong.

[dawei88]

only this
year, only this year

[Sundancefisher]

Originally Posted by JustMe

How you going to transport freight? Anti gravity vessels? Come on guys, be realistic. Fuel costs affect more than private cars. High fuel costs drive up prices of nearly every commodity.

Thanks to the NDP costs to produce increased 20% with the tax increase. Blame the NDP for the latest 20% increase.

[Sundancefisher]

Originally Posted by 79ford

That is relatively false, refiners set a 'rack price', it is based on percieved market demand and inventories. Gasoline is expensive right now after a rough summer for refiners, most are still licking their wounds after all the stuff that went wrong.

Nope. Refined products in North America are traded on the commodity exchange.

Otherwise feel free to refute my understanding. I even backed it up with a link.

[Map Maker]

I just breezed thru Shell's Quarterly.

Looks like there Upstream Earnings were down 131% from last year.
But there Upstream Earnings were up 315% from last year.
And last year (2014) oil was at a robust average of $95.

They will manipulate the price at the pumps till they can cover one side with the other.

Its just a big corporation tax on us.
But what are the options?
If they don't put that "tax" on us, then they start shutting down more operations and more people lose work.

[The Elkster]

Originally Posted by Sundancefisher

Thanks to the NDP costs to produce increased 20% with the tax increase. Blame the NDP for the latest 20% increase.

Now that is just typical right wing drivel. Taxes make up a small part of the cost equation. What about labor and feedstock and capital and maintenance. Cost up 20%...what koolaid you drinking? Same goes for the upstream side too. That tax bump makes up a tiny portion of the spending decision. Had the NDP cut taxes 2% you certainly wouldn't have seen 20% less layoffs. Silly math.

[Sundancefisher]

Originally Posted by Map Maker

I just breezed thru Shell's Quarterly.

Looks like there Upstream Earnings were down 131% from last year.
But there Upstream Earnings were up 315% from last year.
And last year (2014) oil was at a robust average of $95.

They will manipulate the price at the pumps till they can cover one side with the other.

Its just a big corporation tax on us.
But what are the options?
If they don't put that "tax" on us, then they start shutting down more operations and more people lose work.

No. What happens is the company goes bankrupt and everyone is out of work.

The company needs to make money to pay wages as well as shareholders of which most people have RRSP that rely on strong companies making a reasonable corporate profit.