Over the last several years I have been traveling between Terrace and Edmonton, Alberta.
Whenever I travel I do look at the gas prices in each town. Yes there are differences in the provincial tax systems.
But one thing that I do not understand is, when crude oil prices go down it does take a number of weeks for the cheaper oil supply to be reflected at the pumps, as stated by representatives of the oil companies.
But on the other hand, when crude oil goes up, it takes only a few days or less, for that more expensive oil to be reflected at the pumps. Why is that?
The only logical conclusion that when prices go up faster than they go down it must be, as Leonard Nimoy’s Mr. Spock character would say, “that when prices go up, the fuel must be going through the system at a much higher rate.”
I do know that prices are driven by supply and demand, as well as competition and distance to market.
That would be the reason for pump prices to be up to 30 cents a liter more in Terrace than Edmonton.
In some markets, small towns along that route with only one gas station, they have what is known as a captive market, but even those will lose sales from an over-priced product.
On the other hand, in any market, if there is new competition, prices tend to go down accordingly.
I do recall on one of these trips that prices at all gas stations in all towns were exactly the same. That was many years ago.