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HomeMy WebLinkAboutTimes Advocate, 1992-12-23, Page 5Times -Advocate, December 23, 1992 Traveller's woes: Sorting the price of gasoline By Ray Lewis T -A Staff EXETER - Christmas is the time to make new acquaintances and re- new those of old, but travelling to visit with family and friends sears to be costly these days when you pull up to the pumps for a little pe- tro. As you're sitting there waiting for the gas jockey to 'fill 'er up', you sometimes catch a pretty good breeze while that dollar dial spins like a fan. Why is gas so expensive? Why is it cheaper here but more there? Just who sets those prices any- way? With a little help from the Petro- leum Communication Foundation in Calgary, here are some answers to these often asked but seldom an- swered questions. Gasoline prices are often found to vary from town to town. There are five factors that influence not only overall gasoline prices, but also regional variations in price. The first is competition. Gaso- line prices are driven by market forces, not necessarily by costs. Different competitive conditions and marketing strategies usually explain variations in price. Refining and marketing costs are also a factor. Refineries, service stations and other distribution facil- ities must be upgraded and, mod- ernized to meet present and future environmental standards. The dis- tance gasoline has to be transported to market can affect prices as well, along with marketing costs. Retail margin covers station op- erating costs such as wages, prop- erty taxes, utilities, maintenance and local promotion, all of which Back in Time from the archives of the Times -Advocate 10 Years Ago December 22, 1982 - "Restraint should start from within" was the comment of Exeter councillor Morley Hall in moving to have the number of Exeter delegates chopped for the annu- al Good Roads convention. The reeve of Goderich township Grant Stirling is the war- den of Huron county for 1983. Ecole Ste. Marie at St. Joseph's will carry on for another year while the relative merits of continuing classes at the school or closing its doors to students will be thoroughly stud- ied. The contract for the long-awaited new fire hall at Grand Bend has been awarded to Gregus Construction of Exeter. The Gregus bid was the lowest of 16 received coming in at $73,000. 25 Years Ago December 21, 1967 - The monthly meeting of Ontario De- velopment Corporation was held at Centralia Industrial Park. Guests were welcomed to Centralia by Ontario's Agriculture Minister W.A. Stewart, Treasurer C.S. MacNaughton and Ste- phen township reeve James Hayter. At the same time, MacNaughton said, " For all intents and purposes all available facilities in the present buildings here at the industrial park have been spoken for". Inclement weather has hampered construction of the Park- hill Darn. Humans are not the only things being fooled by the weather this year. I.M. Reed phoned Tuesday to say he has been watching a groundhog basking in the sun at his Usborne township residence. He continued, " I'm 78 and I've never seen anything like it". Three one -act plays were presented Friday night by the SHDHS drama club. Starring in one of the plays were David Yantzi, Beth Cook, Gwen Finkbeiner and Diane Zehr. The Ontario Bean Growers Co -Operative of London lost 582,344 in 1967, blamed mostly on spoilage of 6,000 bags of beans in two new storage tanks that leaked. SHDHS students attending a conservation conference learned from Dr. G.E. Pleva of UWO that there are enough cars in Western Ontario to take every man, woman and child for a ride using only the front seat. S0 Years Ago December 24, 1942 -Dr. J.W. Browning in his 101st year passed away peacefully at his home Sunday morning. He had been in continuous medical practice in Exeter for over 75 years. Exeter and area residents have joined in a subscription for Russian relief. The first donations of 510 each came from Dr. R.H. Taylor of Dashwood and Exeter's R.N. Creech. Benson W. Tuckey has been named chairman of the Exeter branch of the Canadian Ration Board. Exeter reeve B.W. Tuckey will stand for re-election m the next municipal election and if successful will run as a candi- date for warden of Huron county. Due to the impending wood shortage for the winter of 1943- 44, Stephen township council has asked the Wartime Prices and Trade Board to raise the ceiling price on hardwood to in- crease production. What is said to be an all-time low for weather previous to Christmas, temperatures over the weekend fell to 12 degrees below zero. It came at 9.30 a.m., Sunday. One oldtimer said it was very unreal as the coldest hour of the day is usually at 3 a.m. A season ticket for public skating at the Exeter arena will make an ideal Christmas gift. Prices are 53 for adults, $2.50 for students and $1.50 for children. 100 Years Ago December 22, 1892 - A report from Centralia says, " Our young men have taken a notion to attend church in Exeter. That village must have more to offer". The Forester's concert in Exeter on the 28th promises to be the event of the season. In Dashwood, Mr. Adam Schoeder Sr. and Mr. Happog have challenged the two wood cutting champs Charles Shunt and Charles Steinhagen to cut any quantity of wood they wish for any amount of money they desire. The statement referring to this matter last week was over- drawn. We think it should have read one day instead of one hour. However, there is $5 at stake that the said pair cannot perform a likewise feat in the same time as was said. Mr. Bertram's family has moved back from Michigan after two years residence there. Uncle Sam's territory must not be as agreable as Crediton. What are the constables in Crediton doing these days. Dif- ferent this ,tv ' :'ve been stolen from a number of rigs standing on the streets. Exeter council set salaries for 1893 as follows; Clerk - 5102.65; treasurer $35. A local merchant asks haw a loaf of breadcan sell for four cents in London and six cents in Exeter. add to the fluxuations. Companies and individual outlets may have to reduce or eliminate their margin from time to time to protect their market share. In addition, because Canadian crude is priced on the international market, Canadian crude costs are affected by world supply and de- mand changes, as well as by politi- cal events. Crude costs make up about one-quarter of the price of gasoline. So why - do gas prices remain high even when the price of crude comes down? Again, the cost of crude is only one factor in the cost of gasoline. . Is vtalr 11 Canadian cents per litre. Just for the record, gas in Italy is $I.68/litre, $1.23 of which is tax, in comparison to the United States which is .33/litre while at the mo- ment Canada hovers around .58. But there are other factors. Transportation costs arc higher in Canada because refineries arc lo- cated further from consumers. In addition, there are twice as many service stations per capita in Cana- da. Each station, therefore, pump less gasoline, which results in high er mark-ups to meet costs. In comparison to many other Ca - Page 6 competition in the marketplace. In- vestigations by the Bureau of Com- petition Policy have routinely veri- fied that there has been no lessening of competition in gaso- line markets. Visiting relatives in the US: If you want to save a little extra mon- ey, hit the self -serve pumps. While the difference in Canada between self -serve and full -serve is usually no more than half a cent per litre, in the United States it is several. Also, there is usually an extra charge for paying by credit card in America. (iA\ O� C ttbt DID YOU KNOW !! "Consumer Energy Council of America advises that for 98 out of 100 homes in- vesting in efficient oil heating equipment is more economical than converting to another fuel." For any of your heating needs Please call Dave Moore Fuels Ltd. 315 Main Street North Exeter, Ontario NOM 1S3 Telephone: (519) 235-0853 1-800-265-2931 'The Best Service when Vou Need n Mosr Therefore, the prices of these two commodities can move indepen- dently. Local competitive forces can force the price to escalate, even though crude is down and vice - versa. The largest factor, as you know all too well, is tax. In July 1992, provincial and federal taxes ac- counted for about 47 percent of the 1 average price of regular unleaded gasoline in Canada. Provincial tax- es vary from a low of nine cents per litre in Alberta to a high of 18.9 cents in Quebec. Some areas also have municipal taxes. Why do gas prices ail go up or down at once? Once again, it's competition. Motorists tend to look for the low- est price, so there is enormous pressure on all stations in an area to match that price or lose their cus- tomers. This often results in price wars where feuding stations reduce profits and sometimes even sell at a loss; a great deal for the consumer. Eventually, prices return to levels that allow a reasonable income for the retailers. Why is gas cheaper across the border? Mostly taxes. While Canadian tax in July, 1992 averaged 27 cents per litre, state and federal taxes in the United States amounted to only radian industries over the last dec- ade, the gasoline business is less profitable. Recession, cross-border shopping, taxation and intense competition have put extreme pres- sure on Canada's gasoline retailers. The large number of retail gaso- line outlets in Canada, the oversup- ply of gasoline, and the opportunity to import the U.S. product into Canada mean stiff competition for the consumer's dollar. Companies may be forced to sell gasoline at a loss to protect their share of the market. But are they? For the 10 -year period ending in 1990, the return on capital em- ployed in the petroleum products industry was 4.3 percent, substan- tially lower than the rate for other Canadian manufacturing industries ' or even bank interest rates. As a re- sult, many service stations will be closing as well as some refineries. In order to make sure prices arc fair, several provincial govern- ments monitor gasoline prices. Some provinces also have gasoline price watchdog agencies. Federal- ly, the Department of Consumer and Corporate Affairs, and in par- ticular its Bureau of Competition Policy, has the mandate to enforce the Competition Act, the primary purpose of which is to maintain May all your wishes come true We at Miles Ford would like to thank our valued customers for their patronage and extend seasons greetings to them and their families. Best wishes. Bob and Gayle Sargeant, Dalton Skinner, Pam McLay, Shawn Rotteau, James Couture, Paul Bernard, Dave Wallace, Don Broom, Sandra Couture mOes ford soles IN EXETER "MILES OF SMILES" South Main St., Exeter 235-0121 crxd IN EXETER oxo.0+ 1 May love fill your heart and peace and home Make us instruments of peace. Where there is hatred, let us sow love; where there is injury, pardon; where there is doubt, faith; where there is despair, hope; where there is sadness, joy; and where there is darkness, light. Grant that we may not seek so much to be consoled as to console, to be understood as to understand, to be loved as to love. For it is in giving that we receive, in pardoning that we are par- doned, and in dying that we are born to eternal life, 467 Main St. Exeter 235-0173 Fine Furniture,inefte9 Flooring and Window Faalhltorts 1