What causes gas prices to rise and fall and what can we do about it?

Roger contributes regularly to radio, TV and print stories pertaining to petroleum issues and market trends. Roger’s gas price updates can be heard daily on the 680 News/En-Pro Gas Update. He’s known as an expert who doesn’t mince words, and who tells it like it is – in his own words… 

Gasoline is an explosive fuel chemically, financially, and in the political arena where the rules of the game are confusing to the spectators, those being you and me. So what can we do about the rise and fall of gas prices? That’s easy: absolutely nothing. Unless you want to nationalize the oil industry and become an economic basket case the likes of Mexico and Venezuela.

Gasoline prices are not a “grassy oasis” conspiracy controlled by the Walmart of oil, OPEC.

In the past, price predictions have been easy to predict based on supply and demand data as released by the U.S. Department of Energy.

Today, gasoline and diesel prices are more determined by the U.S. dollar, the Canadian dollar, and Euro exchange rates – as well as perceived geopolitical problems in the Middle East.

Aside from the logic of supply and demand, day to day price changes are more based on geopolitical emotion, which motivates the speculators to move futures prices of gasoline and diesel up or down on a day to day pricing teeter totter.

Now hear this: there is no shortage of crude oil supply. In fact the opposite is true. We have a glut of crude with nowhere to store the stuff. Demand for gasoline in the U.S. and Canada is negative and has been for two years now.

Aha!

But demand for gasoline and diesel is increasing in Latin America, China and India. That my friends, is why you see crude oil (WTI) prices decreasing, yet retail gasoline prices increasing or at best not decreasing because the U.S. is now exporting gasoline at the expense of the U.S. consumer.

Take that to the ballot box.

If you want to anticipate gasoline price changes, watch the NYMEX futures prices and the Canadian dollar exchange rates.

It’s cave man mathematics: a one dollar change in the price of crude means a swing of $0.0060/L at the pump. But you know what? There is no alternative to the almighty gasoline powered car, our social albatross or rubber millstone. By this I mean there is no such thing as a public transport option inNorth America. Go vote that on both sides of the border.

So what are we to do? Aside from the fact that North Americans love their automobiles and aren’t going to give them up any time soon, anybody who says Canada’s public transit system works is simply wrong.

Take Ontario for example. Someone driving from Richmond Hill to Toronto by car can get to downtown Toronto, off busy traffic hours, in about 25 minutes. That same person travelling by regional transit, then by TTC bus, and finally by subway will easily take two hours to get to the same destination.

Our governments must have forgotten. But it’s understandable they’ve been too busy collecting road taxes. Don’t get me started on gasoline taxes.

We’re stuck with the fluctuation of prices at the pump, and stuck with the speculators, hedgers, and Big Oil companies. We’re all in this chaotic mess together.