Wholesale gas prices drive pumps way up

By Jeremy Appel on August 18, 2018.

jappel@medicinehatnews.com @MHNJeremyAppel

Gas prices in the Hat increased Friday to as high as $1.35 per litre at some stations, while others remained down near $1.15.

Gas Buddy senior petroleum analyst Dan McTeague says since the current wholesale price for gas is $1.21, stations that set prices low are doing so at a loss.

“We all want the lowest prices, but to a degree,” he said. “When I see low prices like that, I tell people, ‘By all means, take advantage of it, but don’t purchase a single thing in their store.'”

The reason some stations decline to raise prices is to increase their market share, he added.

This was evident with lineups outside stations like Fas Gas, which kept its price below the wholesale value.

Even companies with a large volume of sales will only get a one- or two-cent discount from wholesalers, McTeague said.

“At the end of the day, you’re looking at similarity in prices, whether you’re in Lethbridge, Medicine Hat (or) Calgary, wholesale price today for gasoline is within about two cents of each other identical,” he said.

Refiners set their wholesale price every day around 1:30 p.m., which is based on the Chicago Stock Exchange multiplied by the price of the Canadian dollar.

High gas prices have led to inflation, which effects even those who don’t need gasoline for their cars.

“If you’re a refiner here in Alberta, you’re doing extremely well,” said McTeague. “You’re buying cheap oil and you’re selling it for significant premiums over what the Chicago Stock Market Price is.”

He said there’s currently a 28-to-30 cent difference between the price of crude oil and the price of gas before taxes, which he’s never seen before.

“That, to me, is a sign that some folks in Ottawa need to be paying a little more attention to these prices,” McTeague said.

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