From: brewnoserii@gmail.com   
      
   CBC News Posted: Jul 24, 2015   
      
   Oil prices are down, gasoline prices are not. What gives?   
   It's a good summer to be selling gasoline, not a great one to be buying it   
      
   In mid-February, the price of oil hovered around $50 US a barrel, and a litre   
   of gasoline cost, on average, $1.01 Cdn.   
      
   This week, the price of oil is hovering around $50 a barrel and the average   
   price of a litre of gasoline is $1.22.   A few small things have changed over   
   that five-month period: the Canadian dollar is lower by about three cents;   
   Alberta has added a four    
   cent tax to gasoline bought in that province.   
      
   But the big difference is that refineries are making a killing this summer.   
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   Refining margins are the difference between the cost of crude oil and the cost   
   of wholesale gasoline.   
      
   Both Canadian and U.S. refining margins are running at seven- and eight -year   
   highs.  In Canada last month, the refining margin was 27.7 cents per litre   
   according   
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   to data compiled by Michael Ervin of the Kent Group.   
      
   "We're at that part of the summer where demand for gasoline is never going to   
   be stronger," said Stephen Schork, editor of the Schork Report, which is   
   focused on commodities.   
      
   "We're at the height of the northern-hemisphere peak-demand season."   
      
   Demand for gasoline is high    (@_@)    [So what?  We have 'overstock' supply]   
      
   Demand for gasoline is indeed very high this summer.  According to the U.S.   
   Energy Information Administration, gasoline demand is nearly seven per cent   
   higher than it was a year ago.  That's a significant increase.   
      
   Refiners are going full steam right now, at over 90 per cent capacity, in   
   order to keep up with demand.   
      
      
   Prices set by the market   
      
   The gasoline market is tricky to unravel.  Canadian refineries buy crude oil   
   at the U.S. dollar price, refine it and then set a rack price, which is what   
   it costs to buy a litre of gasoline if you show up at the refinery with a   
   tanker truck.   
      
   The rack price is what gas stations pay.     
   Then the gas stations add up to nine cents a litre to the rack price,   
   resulting in the   
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   end price to consumers.   
      
   Gas station margins haven't varied much in the past number of years, so it's   
   really the rack price that fluctuates.   
      
   Those rack prices are based on the wholesale price of gasoline in the United   
   States, which is set by the market, according to Roger McKnight, senior   
   petroleum analyst with En-Pro International.   
      
   "They are in turn based mainly on Wall Street speculators who point to any one   
   of   
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   ten different signposts to come up with a daily guess.  That's all it is."   
      
      
   Refiners look to make up production losses   
      
   McKnight also says that Canadian refiners are boosting rack prices to offset   
   the   
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   pain they are feeling on the production side.   
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   The energy sector as a whole lost more than $600 million in the first quarter   
   of the year, but the companies that also refine and sell gasoline have a bit   
   of a buffer.   
      
   "Esso, Shell and Suncor in Canada all of which have upstream (exploration and   
   production) divisions which are suffering from the low prices they are getting   
   for crude," McKnight said in a follow-up email.   
      
   "To compensate they drive up the racks to increase the refining margins and   
   the followers just tag along blaming higher prices on 'market forces.'"   
      
   Both Suncor and Imperial will report second-quarter earnings next week that   
   should be helped by those refining profits.   
      
   Oil has traded below $50 US a barrel every day this week and analysts expect   
   oil to fall farther before it recovers.  But that still might not mean relief   
   for drivers.   
      
   "I don't see this getting any better for the consumer, even if prices continue   
   to fall," said McKnight.   
      
   "We have a tight number of refineries.  We only have 13 in the entire country,   
   the United States has 143 refineries.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)