Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(iStockphoto)
(iStockphoto)

Road Sage

High gas prices? Don't fret fuelishly, we're here to help Add to ...

We in the oil industry take gasoline prices quite seriously and we are sensitive to accusations of price gouging, moral bankruptcy, collusion, star chambers, raping the environment, price fixing, obscene profits, international conspiracy, regional favouritism and exploitative marketing. Stuff like that hurts our feelings.

More related to this story

That said, it's true that Canadians have been paying more at the pumps and consumers are confused. We're here to help. Below you'll find a straightforward fact sheet explaining today's gasoline prices. And remember next time you're filling up, it's not all bad, despite often costing more than $1.40 a litre, Canadian fuel prices are among the lowest in the world!

Why has the price of gasoline gone up so much the last few weeks?

There are a number of factors:

a) Crude oil prices are set by international forces and the free market. In the past decade, we've invaded many of the places that produce crude oil but there are still plenty of places we haven't invaded yet and they make it really expensive for you to buy gasoline.

b) Wholesale gasoline prices are influenced by supply and demand in markets such as Europe, Canada and the United States. Canadian companies must respond to market fluctuation to keep their margins competitive.

c) We noticed that no matter how high we raise the price of gasoline you guys still buy it.

Why does the price vary from province to province and region to region?

Gasoline prices are a lot like an 1980s teen comedy. We'll be hanging out having a meeting and someone will say, "Hey, I bet I could get those dorks in Ontario to pay $1.50 a litre."

And someone else says, "No way, dude, you'll never get them to go for it!"

"Oh yeah?" the guys says. "I'll bet you a twenty-four of Export I can."

Then my buddy "Squeek" says, "It's on! But you have to get us a pair of Ontario's panties."

So, then we jack up the price and one of our guys waits in the bushes outside the service station with a pair of binoculars to see if the guy can actually close the deal.

Why do all the oil companies' prices seem to be unison with each other?

To a neophyte it would seem as if the oil companies were getting together and agreeing to keep prices high; but it's actually the fault of the consumer. Canadian oil companies drop prices to stay competitive. The free market sets the price. The thing of it is that Canadian consumers give up pretty easily, it's like a really, really overweight asthmatic cop chasing an Olympic sprinter. The cop never catches the sprinter. Gasoline prices may fluctuate but they will never ever, ever, ever, ever really go down.

How does the price of gasoline break down?

- 50 per cent goes to crude oil costs - the raw materials for producing gasoline (wars, secret trials, dictator hats)

- 30 per cent goes to federal, provincial and municipal taxes (hookers, Economic Action Plan advertisements, lemon-infused vodka, Stephen Harper's kryptonite hair spray)

- 20 per cent is the refiner's margin - the difference between the cost of crude oil and the price gasoline sells for - in other words, the profit (picture huge mountains of thousand-dollar bills. We like to get naked and roll around in them)

- 7 per cent is the retail margin - the profit service stations make (more profit)

Why is it prices always seem to go up before a long weekend?

We like to take the long weekend off. Who doesn't? But, when we do, we miss out on a whole day (the holiday Monday) when we could be jacking up the price of gasoline. What if those dudes who aren't on holiday (in places such as Brazil) raise the price and we don't? To combat this situation we pre-emptively jack up the price on Friday to make up for the lost grotesque profits we might miss out on. We call this "premature ejackulation."

Considering that oil companies are making record profits, couldn't you lower the price at the pumps?

Look, the fuel industry is very complex. Way more complex than you will ever imagine. So complex that, should you ever understand it, you might find yourself missing.

Anyhoo - let's start by admitting that we're big and we make big profits. Okay, let's be honest, we make profits so big that they would make a 19th-century robber baron blush. We make profits so big that Nero would look at them and go, "Really? You need all this?" We make profits so enormous that if they were a building and King Kong was real he would grab Fay Wray and climb them because they would be the largest building in 1933 New York.

But you know what, comrade, we earned them. You should try it. We've invested wisely and we had to go to great lengths to ensure these investments paid off. Take Iraq, that place didn't blow itself up. We had to get in there to blow the hell out of it. So excuse us if, at the end of the day, we make so much money that it would take seven lives lived end to end to count it all.

Where can I get more information on gasoline pricing?

You know, I think you've had plenty of information on fuel prices. I think you're good. Go home, watch some hockey. Eat something. Leave fuel pricing to the experts.

*****

Follow Andrew Clark on Twitter: @aclarkcomedy

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories