by Paige Saunders
On EDGE: Opinion
On returning to Yellowknife recently, I found myself suddenly surrounded by petrol price professionals, with lots of people expressing the standard “the cost of living is out of control” sentiment that’s often untrue. Then I heard the alternative perspective talking to a couple of people, that the price is (yawn) and people are getting worked up for no big reason. It was pointed out to me that the price in Yellowknife is high, but there have been times where it was lower than the rest of the country. The same person said that on average, it might not be that high, or might just be in line with the high cost of living that’s expected when you live in the middle of nowhere.
Well, I figured I’d try to answer this question: should we be annoyed?
Yellowknife vs. Canada
It’s pretty easy to get information on gas prices from the crowd-sourced site gasbuddy.
I took the time to compare YK (NWT on the two graphs) to all the other places they track and we are definitely the proud owners of the strangest looking price chart on the whole site. Unfortunately they don’t have Whitehorse, Iqaluit or Inuvik on there. But we can see, that on average we have higher fuel prices.
As we can see, Canada generally tracks the oil price per barrel with a slight lag. The barrel price drops, and then a few weeks later the pump price reflects that, which really shows how odd our pricing is.
Why So Odd?
YK’s graphs (and prices) are probably odd due to the fact we have four gas stations for consumers.
The Crowd-Sourced Spikes
The first reason is the data on gasbuddy is crowd sourced, so if on one day a person enters the price at Winks, and then two days later the next person enters the price at the Co-op and it’s different, then we’ll see the value spiking up and down flipping between the two. Ideally, we’d get the average of the two each day, but with our small population, I’m impressed we’re getting anything.
The Duopoly Flatness
The second reason is the more fist shakey one. With only two options, the providers can be kind of lazy, if both stations have the same price and business is fine, then there’s no reason for Johnny to go out and change the numbers on the sign. Sure, it could be price fixing, or it could just be laziness.
The crux of the “what’s the big deal” counter argument is while the price of gasoline is higher, that’s expected. After all, it’s Yellowknife. It would be unreasonable for us to expect the same price as Vancouver for an orange. We all know there’s going to be a premium price for living at the end of the highway. The test is to see if the price of oil is an outlier compared to other shipped items.
To me, an easy way to measure “oil outrage” is to compare the price to other things that are shipped up. If the price increase is due to remoteness, why don’t we compare other things also affected by remoteness?
This is a work in progress, and as of writing, I’ve got food prices and oil prices that are unfortunately not overlapping. The spreadsheet is open to to the public, so please feel free to contribute, I would be especially interested in finding fuel oil prices over this time.
There does seem to be a larger margin between oil prices and, at least, food prices, which are actually about the same a lot of the time. The outrage you have probably depends on your fuel usage, but a five-per-cent difference could easily add up if you’re living outside of Yellowknife or driving around a lot. The thing I find interesting is the price difference might actually come down to laziness. I’ve heard from several sources that one of the suppliers is just passing on the charge they get from their bulk supplier. If that’s the case, it’s time to hustle guys, even if it makes you uncomfortable.
Originally published on the CloudWorks Adventure Capitalist Blog