|FTLComm - Tisdale - February 18, 2000|
|AS this is being written the price you see may already have changed as at last Tisdale
gasoline prices joined the others in this part of the province. While Prince Albert
went up to 68.9 cents per litre last weekend Melfort and Tisdale remained at the
63.9 cent mark for the whole week until Wednesday or Thursday most stations took
the five cent jump.
The reason for the hick is of course the belief by the oil companies that crude oil prices world wide will continue to climb. For a while last summer a barrel of oil was being sold for $12 and it is now $30 and the speculation is that will go higher. The demand for oil remains almost constant and the only changes have been the number of producers selling to the world market. Sanctions have stopped Iran from selling and Russian pipeline and internal problems have limited their production. It would seem that these and other political factors are interferring in the market and the companies are jacking up their prices anticipating shorter supplies in late summer.
The reality is that the price of crude is not directly tied to the price we pay at the pumps. (You will notice that with wheat prices the lowest they have been in history bread prices have shown no decline in relationship) The amount the oil companies charge is pretty much a matter that they decide almost randomly or on their own whims. Despite the low price of crude last year the price at the pumps here never fell below 62.9 cents and with the crude price more then double this increase seems only a gesture. Price in the US, particularly Eastern US continue in the past and present to be well below our costs when transportation and taxes are removed. The oil companies merely set the price they can get.