Drops of liquid gold were being sold at gas stations Tuesday morning; at least that's how drivers felt after an overnight jump pushed pump prices up right across the country.

Vancouver led the country in a race no city wants to win. Motorists on the west coast are paying $1.25 per litre for regular, self-serve gasoline. Parts of southern and eastern Ontario had the lowest pump prices in Canada at a mere $1.08 per litre.

The result: a certain amount of east-west envy, which is uncommon in western Canada.

The sudden jump just as quickly sparked questions about why gasoline is suddenly more expensive.

Gasoline is becoming more valuable by the day due to increases in wholesale pricing. But that's not the whole story. Gasoline inventories in the United States have been falling for weeks, driven in part by problems at some refineries.

In a tight marketplace with just-in-time delivery, pricing of a globally traded commodity becomes almost as volatile as gasoline and a pack of matches.

But that doesn't make sense to one Atlantic Canadian researcher.

"It's getting more valuable by the second actually," George Murphy quipped during a telephone interview with CTV.ca. "I don't know when we go from paying for the gold that it is, to the fools gold value that it should actually have."

Murphy is a taxi driver in St. John's, NL. who volunteers with The Consumer Group for Fair Gas Prices. He has built a reputation for accurately predicting pump prices sometimes days in advance.

Murphy said the price hike and official explanations make no sense.

"It should be a lot lower than it is considering the amount of refined product that is actually out there."

He said that reports from the Energy Information Administration shows "something in the order of 300 million barrels."

"You'd figure that would be enough to carry you over for a week but apparently it's not," Murphy said.

"I've seen numbers like this before and I've seen draws against inventory like this before on the same news that you're hearing."

For four years Murphy said the same "excuses" of heavy demand and tight supply have been used to hike prices but once the summer ends and no crisis occurs, "there never was any reason to worry anyway."

Murphy will not say there is collusion among the big oil companies to set prices higher, but motorists feel that way.

"It's all a sham," an Ottawa woman told CTV News after prices there hit $1.10. "They just put it up, put it up, for no reason whatsoever. Look at the profits they're making."

Pricing is a little more complicated than that.

Crude oil is traded on international markets. Speculators make money based on what they perceive to be the commodity's price volatility in the coming weeks, months or even years.

While they usually only trade large quantities of oil through contracts, their paper chase has "significant influence on market prices," according to Natural Resources Canada's 'Fuel Focus' website.

Then there's the spot market for crude, where oil is bought or sold and delivered immediately to the buyer.

Crude oil then needs to be turned into products that can be used. Once refineries generate supplies of gasoline, diesel or other products, they are sold to distributors, who in turn sell to retailers, with everyone taking a cut along the way.

Even then, the retailer's price is not what shows on the pumps. Federal and provincial governments add on a list of taxes, including:

• Excise tax;
• Provincial tax
• GST/HST;
• Provincial sales tax; and
• Transit tax.

According to Petro Canada, on average 35 per cent of the pump price Canadians pay is tax. The Canadian Automobile Association says that number is even higher, as much as 50 per cent.

Using Petro Canada's average, without tax Toronto's motorists would be paying 70.2 cents per litre instead of $1.08.

No matter where the money is going, drivers are reacting by turning in their gas-guzzling SUVs which were the bread and butter of North America's auto industry as recently as a year ago.

"I've got people coming in, trading in SUVs, pickup trucks and buying smaller vehicles," Karim Ashadali told CTV.ca. The sales manager for Scarsview Chrysler in Toronto said demand for vehicles has shifted dramatically in the last few months.

"Luckily, we've got small cars ... and we got back into the market. But if we hadn't we would be dying right now," Ashadali said.

He credits the rise in pump prices with consumers turning away from SUVs. At one time the four-wheel-drive road monsters were expensive to buy and commanded big resale values. Ashadali said that market reality has been turned upside down.

"The depreciation (on SUVs) has gotten so much higher now that people are losing their shirts on them."

He added that smaller cars are "keeping their value much better right now."

Even choosing to drive a small car would not be enough of a savings for some motorists.

"I have a bike," one Halifax woman said while filling her SUV Tuesday. "It's certainly a lot cheaper to fill that up."