Over the long term, the price of gasoline is very much aligned with the cost of crude oil. CPPI also explained that fluctuations in the price of gasoline are both an indicator and a result of the intense competition among retailers. Canadians are very sensitive to the price of gasoline and some consumers will make purchase decisions for as little as 0.2 cents per litre difference in price. As a result, when one gas station in a neighbourhood lowers its price, a nearby competing station has little choice but to match or better the competitor's price or risk losing sales. The price of gas is gradually pushed downward in this fashion until it drops to its acquisition cost.
Most operators choose the former and the price jumps back up.
This accounts for the fluctuations in price that consumers see. CPPI told the task force that the industry is fiercely competitive and that the more than 20 studies by all levels of government over the past 20 years have all reached that same conclusion. What has been puzzling to the industry and to others is your apparent conclusion that there is a problem with gas pricing and that it requires federal action to solve it. Clearly, the Ontario government has all the authority and tools it needs to deal with the issue of gas prices if indeed there is an issue. The Canadian Petroleum Products Institute was the first presenter to the task force.