Comment 23966

By beancounter (registered) | Posted May 26, 2008 at 22:51:21

Hey Trey.

Your math is excellent, but the cost of gasoline is made up of costs other than that of the raw material.

There's labour used in moving the oil to the refinery and from there to the gas station. In addition there would be administration costs, the cost of the actual refining process, depreciation on equipment used, etc. Oh yes, there are fuel taxes, GST and excise tax. These costs are unlikely to be rising as fast as the cost of crude oil.

We may have to wait a little longer for gasoline to rise to $2.50 per litre.

In any case, how do we predict the price level at which wholesale changes in human behaviour will take place?

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