FAQs : Gas prices

Question 8: What about similar gas prices?
Answer: Many motorists base their choice of gasoline on price alone -- they consider that gasoline brands differ in few, if any, other ways.

Retailers usually post their prices on large street-side signs. Since retailers know that the majority of consumers are very sensitive to price, gas stations often strive to meet or beat their competitors' posted rates. As a result of this situation, competing retailers frequently charge similar or identical prices.

The fact that retailers might charge similar prices does not in itself constitute an offence under the Competition Act -- there must be evidence that competitors have made an illegal agreement to set those prices.

Question 9: What causes price swings?

Answer: The fact that prices swing or fluctuate is generally an indication that competition is working. Prices fluctuate as retailers compete, and each tries to match what the other is charging.

Changes in the level of consumer demand or the conditions of gasoline supply may also cause price shifts.

Question 10: Why are gasoline prices higher in some parts of the country?

Answer:

• All provinces and territories charge different taxes on gasoline.
• Retailers in large cities usually sell more gas. This allows them to operate at a lower profit margin on every litre sold.
• Local demand for gasoline, and local supply conditions, vary from area to area.
• It costs more to get gasoline to the pumps in some areas of Canada. Higher transportation expenses show up in the final retail price.

Question 11: Do the prices of home heating oil and diesel fuel fluctuate as do those of gasoline?

Answer: Unlike gasoline, the demand for home heating oil is seasonal, and the product is usually bought under contract from a supplier for an entire season, at prices that tend to be consistent. The demand for diesel fuel is also relatively constant. It comes, for the most part, from truckers and farmers. Trucking fleets usually negotiate their contracts with one supplier, and there is not the same incentive to make diesel fuel as competitive a product as gasoline.

Question 12: Are gasoline prices cheaper in the U.S.?

Answer: Canadian and U.S. retail gasoline prices are generally comparable, if one removes the effect of the exchange rate and taxes. Canadian prices are sometimes lower than U.S. prices.

Question 13: Do gasoline prices decrease when crude oil prices decrease?

Answer: The Competition Bureau has commissioned studies of the relationship of crude oil prices to retail and wholesale gasoline prices. These studies have found that gasoline prices generally do track crude prices but that there can be a delay of up to two months before decreases or increases in crude oil prices are passed along to consumers. At the same time, some of these studies found, variations in crude oil prices are only one of the factors influencing retail prices.

Question 14: Where can I get more information?

Answer: If you have other questions about how gasoline prices are set, or if you believe that gasoline prices are too high, you can also get in touch with your local retailer, or your retailer's head office. The Canadian Centre for Energy Information also has information about gasoline prices.

If you have information which suggests that gasoline retailers have broken the law, inform the Competition Bureau's Information Centre, or e-mail us at compbureau@cb-bc.gc.ca. For information on the Bureau's whistle blowing policy, please see the Bureau's Whistleblowing Study.