Calgary's volatile gas prices might not make sense, but there's a reason for the fluctuation

Calgarians have, for the most part, enjoyed paying less for gas than most people across the country. But recently prices at the pumps have been volatile.

That's because of the marketing margin — it's the difference between what consumers pay for gas and what retailers pay. 

According to Natural Resources Canada data, gas stations in the city are taking a profit margin of about 25 per cent. In comparison, the average profit margin across Canada is nine per cent.

That's not uncommon, says Paul Pasco, a principal consultant with Kalibrate, a fuel and convenience retail analytics platform.

Retailers in places like Calgary, Regina and Winnipeg use margins to stabilize prices over the year, he said. It's something that reflects retailers trying to make up for market factors over the course of the year.

"It's not necessarily that retailers have been taking more margin, they use more of what they call a forward average scheme," Pasco said. "They'll look at how much margin they've managed to recoup off of their fuel, and then they'll make an adjustment now, to sort of recover."

Throughout October, Calgary's marketing margin was 24 cents per litre. Toronto's was seven cents, and Vancouver's was nine. 

There are a lot of factors that go into determining the price of gas in Calgary — and the approach is different from other major centres.

"Calgary's market, and even Edmonton's, we seem to move fairly on trend," he said.

"What we'll see is that as the wholesale value comes into the pump, it sometimes takes a little while for the full impact, the full trend, for the change over to happen in the tanks and for us to see the retailers drop prices."

The margins in Calgary are starting to trend down again, and despite the average price of gas still being higher than it is in Toronto, some are happy with what they're paying.

"I'm feeling pretty good. I'm looking at the price right now and I'm off to Lake Louise, and it actually seems pretty reasonable," said Jeremy McCrea, an oil analyst who was filling up on Tuesday. 

"Right now, with our gas tax being a lot lower than a lot of the provinces, that's definitely helping."