CALGARY — Just west of Toronto, Karolina Wisniowska is taking part in the new favourite summer pastime for Canadians — guessing when and where a bargain is to be found at the pumps.
“Oh my God, you have to pay attention,” the 23-year-old secretary says, filling up at a Shell station. But Ms. Wisniowska, who spends an hour commuting each day, is putting just $20 worth of gas in her car, saying she is on the hunt for a better price than the $1.057 a litre posted at the Mississauga station.
Everyone has their own secret for saving on gas — Ms. Wisniowska swears the deals are to be had after 9 p.m.
Other customers say the best time to catch a lower price is in the early evening, on the drive home, while another man says he monitors gas prices from his high-rise condominium. Not one realizes that their pursuit of a bargain is one of the chief reasons that prices are swinging ever more wildly in markets such as Southern Ontario.
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The pump prices at a typical gas station in Toronto can change nearly every two hours, as retailers chase consumers who are measuring savings by the fraction of a cent.
The Greater Toronto Area merely has the fastest pace in a dance that takes place every day across the country, a two-bit tango that is gaining speed with rising oil prices — the latest addition coming this week with a ruptured pipeline disrupting shipments from Alaska.
Just five years ago, price changes were much less frequent, no more than once or twice a day, according to the industry.
Since then, higher commodity prices, more advanced communications technology and — most important — Canadians' love of a bargain, however fractional, have combined to dramatically increase the volatility of pump prices.
Vancouver is nearly as volatile as Toronto, with smaller cities such as Calgary experiencing less frequent and less severe price swings. But the phenomenon is felt across the country.
Three years ago, Shell Canada Ltd. adjusted prices at its company-run outlets about 250,000 times in a year. This year, it will change them 400,000 times.
The pace of these fluctuations is as confusing as it is maddening for many Canadian drivers, who can be forgiven for wondering why the cost of gasoline that is already in an underground tank can swing so often, and so much.
But the petroleum industry says that question is beside the point. The real issue is attracting fickle consumers, who will flee at the first hint of a better deal elsewhere. “They'll cross the street for a 10th of a cent,” said Ted Stoner, spokesman for the Canadian Petroleum Products Institute.
That level of bargain adds up to a pittance, just a nickel on a 50-litre fill up. Even a spread of a half a cent, a gap rarely tolerated for long, gives that same consumer a literal two-bit savings: 25 cents spread over 50 litres.
Gas retailers have tried to attract consumers with points programs, better retail outlet and fuel additives, but those efforts have largely flopped. Price is what matters to drivers, and price is what retailers use to lure them.
“There's not a lot of brand loyalty,” said Zeigham Khokher, a finance professor at the University of Western Ontario's Richard Ivey School of Business.
He said Canadian consumers are more bargain-conscious than drivers in the United States — where nearby retailers will often have wide spreads in pump prices — because of lower disposable incomes and higher gasoline prices. (Although, he added, the recent surge in prices has intensified bargain-hunting on both sides of the border.)
Technology also plays a part, as consumers scout out momentarily lower prices and send the results to be posted on websites, accomplishing in moments the sort of collusion forbidden by law to gasoline retailers.
However, the companies have their own technological weapons. Those can be as complicated as intricately programmed computer systems that use preset marketing rules to instantly readjust prices throughout a city. Or it can be as mundane as using computers to digitally change prices, rather than hauling out a ladder and climbing several metres to switch numbers by hand.
The goal of all this effort is not, as Canadians might think, to find the highest possible selling price.
“If you always have the highest price, people just stop looking at your sign,” said Jon Hamilton, spokesman for Petro-Canada.
Instead, retailers aim to hit a balance between a price that will draw in the most consumers while giving up the least amount of revenue. Mr. Hamilton said outlets in major urban centres typically aim for an average spread of five cents a litre between the pump price and the cost of wholesale gasoline, although at any given moment the margin can swing dramatically.
For much of the time, drivers are effectively buying their fuel below the price at which it should be selling, Mr. Hamilton said — a situation that, paradoxically, seems to increase resentment among consumers.
“In any other business, when you offer your product at a discount, it's called a sale, and people applaud that,” he said. “In the gasoline business, it's somehow hiding an evil conspiracy, which I've never understood.”
With a report from Hayley Mick in Mississauga
