Gas price discrepancies explained by provincial monitor

Gas prices are continuing to rise because of the crisis in Iraq but many drivers have been left wondering why prices are different from one pump to the next, and they're not talking about a difference of a few tenths of a cent.

CFRA listeners say they have seen as much as a 7 cent difference in price, per litre, between Orleans and Kanata.

According to Stewart Knipping, the province's third-party gas prices monitor, that could be because independent retailers will often drive prices down.

"One reason for that may be that they want to attract traffic to their outlet because they have other things that they can sell there, like convenience items, on which they earn much higher profits than they earn on gasoline. Gasoline is not very profitable," he said.

There are fewer independents in Kanata than in Orleans and that may be driving the difference.

Stewart Knipping also says the difference in prices could be based on delivery timings and higher up-front costs.

If you see a very large difference in prices it could be thanks to lower demand at that station.

"What is happening is that lower priced person is holding on to the lower price because he's probably got cheaper gasoline in his tank and he hasn't raised his price," he said.

When the next shipment comes in Knipping says he'll be charged the higher wholesale price and will have to raise his retail price.

Knipping also dismissed the idea that prices in Ontario are fixed. He said the reason you'll see the same price at every gas station within a few blocks' radius is because if a station dropped their price by even one tenth of a cent they would gain a monopoly in the small area.

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