Thursday, July 26, 2007

Gas Price Down - Oil Price Up!?

What's up this week with the price at the gas pump? It's falling at the same time that the world price per barrel of oil is reaching a historic high!

And oil is predicted to hit $100 a barrel, perhaps even as soon as the end of this year.

No one complains when the price at the pump drops, but it is good to know why it goes up and down. Even if it seems to bear no relationship to the world price.

Supply and demand are the biggest factors in the day to day movement of the price at the pump. Seasonal demands. Refinery maintenance. Shutdowns for all kinds of reasons. Driving habits.

Did you know that many campground are empty in August throughout the Canadian West because most people take holidays in July?

The biggest part of the price at the pump is still taxes - two or three levels, sometimes more. For more details on this topic see Outrageous - The Price at the Pump in my new book, Pumped: Everyone's Guide to the Oil Patch.

If North American prices at the pump were to go to European or Japanese levels - say $2 per litre - we would all drive smaller cars and trucks and our demand for "foreign" crude could be greatly reduced.

Sounds radical, perhaps, but the price of oil is no higher for other G8 countries that it is for us in North America. It's just that their governments tax gasoline much higher at the pump in order to promote conservation.

There's a Conservative idea that makes sense to me.