Burnaby residents hoping gas prices will drop as quickly as crude may be in for a disappointment at the pumps.
Dave Schick, spokesperson for Burnaby’s Chevron refinery, said there are many factors involved in determining gas prices, not just the cost of crude.
“In general there will be a downward pressure on prices, because the input costs on crude are lower,” Schick told the NOW.
The price of oil dipped below US$30 a barrel Tuesday. Canadian oil was going at an even cheaper rate, trading at less than $20 a barrel recently. Schick said it’s difficult to predict gas prices, because there are several things that affect pricing at the pump. And there are taxes to consider: roughly 44 per cent of the consumer cost of gas goes to provincial and federal taxes, Schick said.
“It’s a lot. If you take out the taxes, then you’re looking at a few cents per litre difference in different jurisdictions,” he said.
Meanwhile, costs for crude supply for the Chevron refinery are down, but like many oil companies, Chevron is involved in oil production as well and loses money when crude prices drop, Schick explained.
“The revenue comes from crude, so when I talk about the pressure on the company when crude prices are low, that’s a lot of revenue,” Schick said. “When we sell the product on the resale side, we try to optimize it that way.”
Schick also said the gas market has its own supply and demand considerations that affect pump prices. For example, if gas prices are declining, that can drive up demand as people rush out to buy cheaper fuel, which in turn increases demand. The supply for the refined product is a fixed volume, even if the price of the crude changes, Schick explained.
