Analysts Stumped by Price Increase at Calgary Gas Pumps

Nov 02, 2017

By CBC News

Gas at many Calgary stations is now almost 128 cents per litre, and the reason for the latest hike has at least one petroleum analyst mystified.

It's the second time in less than a week the price of gas has spiked significantly.

On Sunday, gas was 108.9 cents a litre at most stations in the city, but jumped to 113.9 on Monday then to 127.9 on Thursday.

Roger McKnight of En-Pro International suspects there may be a problem in the Edmonton refining hub.

"My concern is with the wholesale prices," he said. "Imperial Oil jumped the wholesale price on Wednesday by 7.9 cents a litre, and Shell and Suncor followed suit pretty soon after that. There's no reason for that whatsoever."

McKnight believes record U.S. exports of crude oil, diesel and gas could also be a factor in the increased prices.

Those, in turn, keep rack rates in North America high.

"The demand side for diesel is actually down, the demand for gasoline is sort of level," he said.

"So this really all depends on if the domestic market can support higher wholesale prices."

McKnight says even if the oil companies are trying to boost their retail margins, the price should only be about 118.9 cents a litre.

The rack rate is the price the retailer pays to the supplier and change on a daily basis, said Michael Ervin, senior vice-president at the Kent Group, which could account for some of the increase.

"Over the last month, wholesale prices have been steadily increasing, pretty much on a day-to-day basis, but retailers are very reluctant to pass that along on a daily basis, which is why you don't see daily pump price changes," he said, noting competition has kept prices down in recent weeks

"It gets to the point where the dam must break in order for retailers to re-establish a price that provides them some level of reasonable margin," he said.

Source: http://www.cbc.ca/news/canada/calgary/calgary-gas-prices-rising-1.4385446