Not all fuels fall with gasoline
Diesel and heating oil prices hold steady despite deflating gas prices
Randi Beers
Northern News Services
Published Friday, December 12, 2014
SOMBA K'E/YELLOWKNIFE
Gasoline prices have dropped but costs for other fuel products aren't following suit, leaving some people wondering why.
Some consumers are scratching their heads over rising diesel prices in relation to dropping gasoline prices in Yellowknife. The price of diesel has risen from $1.376 to $1.449 over the past year while gasoline has gone down from $1.389 to $1.239. Esso, shown here, is advertising the same prices as the city's four other gas stations. - Randi Beers/NNSL photo
Diesel prices in selected cities
Current:
- Yellowknife: $1.449
- Whitehorse: $1.449
- Halifax: $1.158
- Kamloops: $1.352
- Toronto: $1.241
- Vancouver: $1.385
Last year:
- Yellowknife: $1.409
- Whitehorse: $1.424
- Halifax: $1.419
- Kamloops: $1.423
- Toronto: $1.324
- Vancouver: $1.449
Heating oil prices in selected cities
Current:
- Halifax: $1.149
- Kamloops: $1.184
- Toronto: $1.208
- Vancouver: $1.182
Last year:
- Halifax: $1.203
- Kamloops: $1.320
- Toronto: $1.332
- Vancouver: $1.274
** data not available for Yellowknife or Whitehorse |
This discrepancy is most obvious at the pump, where unleaded gas prices have dipped to a low of $1.239 across town, but diesel is up this year to $1.449 from $1.376 last December as of Tuesday. Meanwhile, average diesel prices across Canada have dipped this week to $1.286 from $1.343 last December, according to Natural Resources Canada.
Jon Balmer buys diesel for his truck and heats his home with heating oil. Although he declined to speak to Yellowknifer, he shared a post he wrote about his frustration to a Yellowknife cost of living Facebook group.
"I am really getting sick of the gouging that is going on in relation to diesel fuel prices," he wrote.
"It now sits a good 20 cents higher than regular gasoline – heck I could even get premium for cheaper than diesel."
He went on to point out his home heating fuel, which is essentially the same as diesel, is cheaper than the product he puts in his truck.
"I do not understand," he wrote.
According to Stats Canada, the average price for home heating oil in Yellowknife, calculated in October of each year, held steady at $1.20 per litre for the past three years, then jumped to $1.286 in 2014. Midnight and Bassett Petroleum advertised heating oil of $1.29 per litre Monday afternoon, while Matonabee Petroleum sold heating oil for $1.27 and Polar Fuels was the cheapest option at $1.23. All prices include tax.
According to Natural Resources Canada, the average price of heating oil across the country dipped to $1.186 this year from its Dec. 2013 price of $1.231.
Yellowknife is unique
Jason Parent is the vice president of MJ Ervin and Associates, a consulting company based in London, Ont. that analyzes fuel markets. He said consumers shouldn't be surprised if Yellowknife's commodity prices don't move up and down with the market.
"Cost structures are different up there," he said.
"Prices typically will stay in their spots as they move around at a national level. It's normal, because costs are much higher up there. The cost to get the product is higher."
He added gasoline and diesel are two different products with their own supply and demand curves.
"Gas and diesel move independently of each other," he said.
Heating oil prices will follow their own trends as well, says Parent, as demand
for the fuel goes up during winter months.
"We haven't seen a big drop in diesel across the country due to seasonal differences in terms of demand for diesel than gas," he explained.
"Gas peak demand is usually spring and summer and it falls in the fall, and then diesel is the opposite because of its close relationship to heating in the fall."
Diesel and heating oil are essentially the same product, said Parent, but added consumers wouldn't want to put heating oil, which is cheaper than diesel, in their cars because the sulphur content of heating oil is higher and this would cause car emissions to surpass environmental regulations.
Several local diesel distributors, all of whom declined to be named, indicated they adjust their price according to rack prices which are set daily by crude oil refiners such as Suncor Energy in Alberta.
The Dec. 11 rack price, which is essentially the wholesale price, per litre, for heating oil in Hay River (which Yellowknife also uses) was $0.812.
Gasoline prices began moving Nov. 19, after the Department of Municipal and Consumer Affairs reached out to Yellowknife retailers to discuss how prices are set in light of the worldwide decline of crude oil prices.
