Posted on 05/05/2004 11:29:02 PM PDT by Pikamax
Gasoline prices soar to new highs
FROM CANADIAN PRESS
CALGARY — As the blame game began over record gasoline prices across Canada this week, industry watchers warned motorists to brace for even higher prices at the pump this summer.
Crude oil hit fresh 13-year highs of $39.58 (U.S.) per barrel today. And the average price of regular gasoline in Canada jumped four cents in the past week to a new high of 85.7 cents per litre.
"My expectation is that we would see a summer of high prices," said Cathy Hay, a senior associate at M. J. Ervin & Associates, a Calgary firm that tracks retail fuel prices.
"That's not to suggest that individual markets may not see some price-war activity, but I think that we're in for a long summer and I'm not sure that we've hit the top at this point."
Prices in most Canadian cities increased, with Ottawa rising 10.1 cents to 85.9 cents per litre as a local price war ended. Drivers on Vancouver Island and in Newfoundland paid more than 92 cents per litre of regular gas.
Hay said there is potential for the market to rise by about three to five cents per litre. And that's without shortages that could be triggered by political turmoil in the Middle East or a sudden refinery problem in North America.
Politicians in Ottawa argued over fuel prices in the House of Commons, with Bloc Quebecois Leader Gilles Duceppe blaming oil companies for boosting prices to rake in "excessive" profits.
"When will the prime minister stop thinking about the profits for the shareholders and put some discipline on the oil companies by creating a price surveillance board for the sector?" Duceppe demanded.
Meanwhile the Canadian Taxpayers Federation accused Ottawa of ``tax gouging," with an estimated $1.4 billion being pumped into GST revenue from current fuel prices.
"GST is even charged on fuel taxes," observed federation director John Williamson. "Coupled with rising fuel taxes, motorists are getting hosed at the pumps like never before."
Independent gasoline retailers called for some form of price regulation, at least in Ontario, to protect small companies from wild swings that could force them out of business.
Dane Baily, a spokesman for the Canadian Petroleum Products Institute in Ottawa, said one of the major factors in current pricing is the high price of crude oil — which he said is not justified by global supply and demand fundamentals.
"When you look at the crude market, other than a bit of an unknown around China and India . . . it's very hard to justify the $39-per-barrel crude, other than a lot of speculation."
Analysts say crude prices have been sent upward by concerns over the security of supply following last weekend's attacks on foreign workers in Saudi Arabia. It's unknown when prices will drop as fears of further attacks persist.
Meanwhile in North America, refining margins — the difference between the price of crude oil and the wholesale gasoline price — are reaching historic highs.
Baily said this widening profit is driven by a variety of factors.
"First of all, demand is high — unusually strong at this period of the year, so then there's all kinds of speculation: Is it going to go crazy during the summer? Nobody really understands what the fundamentals of the stronger demand is in the U.S., and it leads to a fair amount of speculation in the markets."
Other issues include whether gasoline imports will be available to the U.S. market to make up the shortfall in refining capacity, and recent changes to American clean-air fuel specifications which are exacerbating the situation.
Neil Levine, a spokesman for Suncor Energy's marketing and refining business, said high crude oil prices are good for upstream producers but bad for the downstream refining and marketing side.
"It's a tight business — I think it's important for people to realize that," Levine said from Toronto.
"We're lucky at the end of the day if we end up with a half a penny or a penny a litre in profit."
It's been less than 1 years since OPEC cut production in an effort to get crude oil prices up to $30 per barrel. They basically promised that they would be happy with that number - yet they are cuttin production yet again - with oil at nearly $40 per barrel. My tinfoil hat is picking up signals that the Muslim-dominated OPEC is trying their own means to influence the election - by putting pressure on our economy, and making Bush look bad. I fully expect to see Kerry ads the closer we get to November to remind us of the record gasoline prices under Bush.... What's bad is that, even if GW doesn't REALLY have any power to do anything regarding oil/gasoline prices (other than a repeal of taxes on gasoline....), it looks bad and stupid consumers will assume that he is just being buddy-buddy with his fat-cat oil buddies. I see this becoming a MAJOR campaign issue - right or wrong.
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