Whatever happened to gas prices?

Hey there, time traveller!
This article was published 04/11/2010 (5620 days ago), so information in it may no longer be current.

If you had asked me five years ago what price I expected to be paying for gasoline in the far-off year of 2010, I probably would have said $2 per litre — perhaps more.

After all, it was the summer of ’05 when prices in Brandon cracked the loonie mark for the first time, and it seemed like every summer thereafter would bring a fresh new peak, while winter gas price lows would never quite sink back down to where they were.

The centre picture, above, was originally taken by Brandon Sun photographer Colin Corneau on Aug. 15, 2005, to mark that fateful first time when prices breached the dollar mark. Remember when gas stations had to squeeze the "1" in front of their signs? Ah, nostalgia.

(Aside: All the gas prices in this post are the "sign price" not the "pump price" — I really really hated it when you could get 3.5¢ off at the pump because it makes comparisons difficult.)

Back in those heady days of 2005, pump prices seemed to be up, up, up (so did the stock and housing markets — ha ha!).

So it’s strange that I don’t even think twice about the gas price when I fill up now. In fact, I recently commented to my girlfriend that I was pretty sure gas prices hadn’t changed at all in about a year.

The pump price today is 96.9¢ per litre. A quick check of GasBuddy.com shows that my suspicions are, basically, correct. For the past 18 months, the price of gas has been within a penny or two of what we pay today. It’s barely changed.

The picture at the right, above, was taken July 20, 2009 (also by Colin), and it shows a price that’s only half a cent off from today’s price.

That was down from a price of 104.9¢ per litre about six weeks before, in early June 2009.

(I did a quick (not thorough) search of Brandon Sun archives for stories and photos that we’ve done on gas prices, and that’s where most of these numbers come from.)

Since summer 2009, prices have barely budged.

GasBuddy allows you to chart the historical price of gas in your area and also see what’s happened to the price of oil (often cited as a cause for rising gas prices). Here’s the last 18 months:

So despite all the fluctuations in gas prices (they’ve risen from about $60/barrel to about $80/barrel) the price of gas hasn’t moved at all.

An oft-cited explanation? The strength of the Canadian dollar. Luckily, there’s another chart-building tool at the currency site XE.net. Here’s the last 18 months of Canadian dollar (how we buy our gas) vs. American dollar (how oil is priced):

So in that period of time, the Canuck buck has gone from being worth about 85¢ to being worth about $1.

I’m no mathematician, but let’s crunch the numbers:

• July 2009 – A barrel of oil is about US$60 which would be about $70 (Cdn).
• November 2010 – A barrel of oil is about US$80, which would be about $80 (Cdn).

So, even adjusting for the strength of our dollar, the price of oil has climbed by about 15 per cent. Yet gas prices are the same.

They stayed in the mid-90s through a "summer driving season" when they’re usually expected to climb, and then stayed in the mid-90s through a "winter driving season" when they’re usually expected to drop. And then they stayed in the mid-90s all this past summer, too. And I don’t expect them to drop this winter.

It’s very odd.

Let’s look a little further back. Since 2005 was when the price of gas cracked a dollar a litre for the first time in Brandon, let’s take a look-see since then. Again, GasBuddy shows the price of gas and the price of oil:

See that huge spike in 2008? That picture at the very top of this post, at the left, was taken by Sun photographer Tim Smith on Sept. 12, 2008, when the price of gas in Brandon hit 144.9¢ per litre. As far as I know, that’s it’s highest price ever in this city.

(Aside: I also really hate these tenths of a penny — it would be easier to write $1.44 per litre, or 97¢ per litre.)

The Canadian dollar has also been on a ride over the past five years, too. Check it out:

So let’s crunch the numbers again. From Sun archives, I have some exact dates and gas prices in Brandon. Of course, because everyone gets all antsy when the price goes up, we do lots of stories about "Gas Prices Hit New High" and everyone yawns and doesn’t bother to cover it when it hits a new low. As the chart above shows, gas prices plummeted in late 2008, probably down to the mid-70¢ range, but I can’t pinpoint it.

Anyway, here are the numbers I do have:

And, if you make a pretty graph out of it, this is what you get:

Note that I have converted the price of a barrel of oil into Canadian dollars, so that we can see price pressures without getting all mucked up by currency fluctuations.

Interestingly, I don’t see a super-strong correlation between the price of oil and the price of gas. Especially over the past two years, when the price of oil, in Canadian dollars, has been heading up, and the price of gas in Brandon has been on a slow decline.

Explain that one, conspiracy theorists!

Anyway, I’ve been working on this in my spare moments all day, and I just intended to make a quick, semi-interesting observation about how the price of gas has been stagnant lately. Weird where a few Google searches can lead you!

Okay, one more Google search. Here’s the Bank of Canada’s official inflation calculator. If gas in Brandon cost 103.9¢ per litre 2005, and if it had gone up by the average amount of inflation, then we would expect gas to be selling for about 111.9¢ per litre today.

That’s just average inflation — often, gas rises faster than inflation. Of course, the actual price of gas has declined.

Using the same calculator, a litre of gas at 96.9¢ today is about the same as paying 89.9¢ back in 2005.

And heck, I got my license in 1992, when the price was about 49.9¢ per litre. According to the inflation calculator, that would be like paying 68.9¢ today. Man, gas really has gone up!