Like just about every motorist who woke up to higher gasoline prices Friday, Barbara Croome had one question on her mind. Why?
At the Mohawk on First Avenue and George Street, gas was still $1.249 per litre for regular gasoline, but most filling stations were charging $1.289, and a majority of city retailers had jacked it up to $1.299.
Just last week, the price in town was $1.199.
Croome would love an answer.
"Our gas prices are not indicative of what we should be paying," said Croome. "We travel a lot and gas prices are so much better in Alberta, and even throughout the province here. I'm not sure what goes on here in Prince George, but it's not right.
"If you go to Edmonton you've got different pricing at different stations. Why is that not happening here? It should be a competitive marketplace. I have no choice, I have to get around. We are isolated here and we need the ability to move around."
Jason Fanshaw was fueling up his truck for a trip Kelowna to go to a hockey tournament Friday and was not impressed about the
latest pump price jump.
"I'm trying not to swear," Fanshaw said.
"We had a five cent increase last week and now there's another five cents; I'm not a real happy guy right now."
While market prices for crude oil have climbed six per cent this week , closing Friday at nearly a 10-month high to $109.77 a barrel on the New York Mercantile Exchange, that oil won't be delivered to the refineries until April. So what gives?
Wayne Sands, owner of Sands Bulk Sales Ltd., which distributes fuel from the refineries to individual gas stations, says the wholesale rack price of regular fuel has gone up seven cents per litre since the start of
January.
He said retailers are not gouging customers. Their profit margins are small on fuel sales and despite what's happened over the last week, they don't rush to raise their prices as soon as the wholesale price climbs.
"Usually what happens is service stations don't like to change," said Sands. "If you own a service station and put your price up, nobody's going to go to your service station. They'll go to your neighbours. They basically seem to wait until the wholesale price climbs enough that they're almost in a loss position and then it forces them to raise the price, and they hope that everyone else follows.
"Usually it's a major oil company that makes that call and some sales rep in Calgary will say they have to move the prices in P.G. They change all their sites to whatever they think they can get away with and usually everybody follows. Whoever the leader is will take a gamble that the other guys will follow.
"I know the independent guys out there who own their own site do not make tons of money, and anybody who thinks Prince George is ripping them off, go buy a gas station and see how long you stay in business."
Sands said large oil companies usually lead the charge to raise prices, while the big-box retailers are most often the trailblazers leading downward price trends to try to entice customers to their stores.
"People are slow to go down but they're also slow to go up, too, and people don't realize that," said Sands, who owns no retail gas stations. "Even if the oil companies own a refinery and own the crude oil wells, whoever is handling those retail stores still has to work off wholesale pricing through the
refinery."
Sands calls Prince George a steady market and gas prices don't vary much across the city, but in smaller cities like Quesnel or Vanderhoof there's more chance of an independent retailer cutting the price to gain a competitive edge, especially on long weekends, because bigger companies have to clear price changes through the chain of command in the company. That usually doesn't happen when those sales reps are gone for the
weekend.
"If you own an independent gas station you can drop your price the day before a long weekend and be the cheapest in town for the whole long weekend," he said.
On most long weekends, Sands says the demand for fuel increases and wholesalers at the refinery level jack up prices in
anticipation and the retailers follow suit.
Alberta motorists pay less taxes on gasoline and that accounts for their lower pump prices. There are also several refineries to choose from, which accounts for the price differences.
On every litre of gas sold in B.C., 10 cents goes to the federal excise tax, 14.5 cents goes to the provincial fuel tax. The carbon tax takes 5.56 cents on every litre and will climb to 6.67 cents per litre on July 1. It's also applied to diesel and all oil-based fuels, as well as natural gas. The GST/HST takes another five per cent.
"That's tax on tax, so if you have 20 cents in taxes in B.C., five per cent of that gets added on to that as well," said Sands.
