Sun. Jul 14th, 2024

Another hot topic in my home town of Montreal, Quebec, Canada concerning the ever seemingly uber expensive $/litre we pay gas to fill up our cars. Some ask why are we paying soo much more than before while the crude oil is soo low? Devil’s advocate speech is that the Loonie is soo depreciated against the Greenback, and that is what explains the higher gas prices at the pump, albeit the ultrea cheap crude oil quotes.

I gatherered some charts to proove OR dispell these theories.

Let’s look at today’s market:

Crude oil is around 30 dollars USD.

@CL.1 29.76 -2.43 (-7.55%) - Google Chrome

The value of the usdcad forex pair is around 1.42.

Graphique conversion de devises USDCAD - Yahoo! Québec Finance - Google Chrome_2

So that makes out to 42.82 CAD a barrel.

Convertir Dollar Canadien contre Dollar Américain CAD USD Convertisseur de devises - Google Chrome

Today’s price at the pump for a litre of regular gasoline in Montreal is between 1.11 and 1.02 expressed in Canadian Dollars. I’ll take the middle of range for arguement’s sake (1.06).

Montreal Gas Prices - Find Cheap Gas Prices in Quebec - Google Chrome

So that is today’s ratio 42.82 a barrel for 1.06 a litre at the pump! (coefficient 40.39)

Let’s rewind circa May 2004:

The Crude Oil was 50.39 USD.

crude historical

Usdcad for May 10th 2004 was 1.3917.

Graphique conversion de devises USDCAD - Yahoo! Québec Finance - Google Chrome

Giving a value of 70.12 CAD a barrel of oil.

Price at the pump for Montreal is set at 85.8 (average).

Table 11.3 Gasoline prices, selected cities, 1995 to 2009 - Google Chrome

The ratio for May 2004 was 70.12 a barrel for 0.858 a litre at the pump! (coefficient 81.7).

Comparing the coefficients tells me we are getting TWICE AS LESS gas at the pump today than in 2004 for the same amount of disposable income!!!

Is there something I’m missing? My conclusion is we are definately paying too much for the gas at the pump IF the major factors are the combination of usdcad vs crude oil. Else, there is some un explained delta making the price at the pump that much more today than 12 years ago!