Quote:
Originally Posted by STeeLy
I don't quite understand.
How is Gas in Ontario cheaper than Gas in Alberta?
and it's not because we haven't changed our prices out here yet... it's like that all the time for some reason... when Calgary was hovering 132... it was 126 out here
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I believe the main reason is because there are only a few huge oil companies that dominate the entire industry (Exxon-Mobil, Conoco, Shell, Chevron, BP, maybe a couple others). Most, if not all, of them are American-owned. These companies look at the big picture for their fuel distribution business, and make decisions based on that.
There are many vairables that go into gas prices (tax, cost of transportation, supply/demand, etc). Overall though, since the biggest markets in North America are fairly obvious, it makes sense for the companies to make their base of operations near these areas to limit unnecessary shipping costs for themselves
overall.
One thing that can happen for certain areas because of this is extra transportation of the goods than necessary. For example, oil could be drilled in Alberta, shipped to a nearby refinery and be all but ready for distribution to the public there for a low cost. "Big Oil" doesn't see it that way. They look at the bigger picture for themselves --- Alberta is small, so they choose to ship all this near-finished fuel to their main (often U.S.) hubs for "tweaking" (ie. addition of additives, in-house testing), and then final shipping to the individual gas stations after that. The shipping costs become inflated for Alberta because there is no localized company which caters to just them; if there were, they could probably undercut gas prices at the pump there by a fair margin.