Jenya
09-23-2005, 11:42 AM
Rita Fuels Surge in Gas Prices
BY: PATRICK BRETHOUR
Globe and Mail (http://www.theglobeandmail.com/servlet/story/RTGAM.20050923.wxgas-prices23/BNStory/National/)
Friday, September 23,2005
A wave of panic buying drained gas stations across Eastern Canada yesterday as motorists scrambled to fill up their tanks, driven by the fear of another hurricane-induced price spike.
From Windsor in Southwestern Ontario to Halifax, a relic of the 1970s energy crisis suddenly reappeared: A lineup at the gas pump.
A handful of retailers fuelled the frenzy by jacking up pump prices to unprecedented levels, as high as $2.24 a litre in Stratford, Ont. But many kept prices steady, and then watched as drivers buying up comparatively cheap fuel bled their tanks dry.
One major wholesaler, Bradshaw Fuels, said 30 of the 120 retail sites it supplies in Southwestern Ontario ran out of gas by yesterday afternoon. The remaining 90 are in danger of doing so today, the company said.
“There's consumers going crazy, lined up down the street,” said one official with the firm, adding that she believes the broadcast media created the panic by telling drivers to fill up now to avoid a spike in prices that could come if hurricane Rita wreaks further havoc with the oil industry in the southern United States.
Three weeks ago, hurricane Katrina did just that, wrecking oil platforms in the Gulf of Mexico and, even more importantly, devastating refineries along the coastline.
Wholesale commodity prices soared that day, and pump prices soon followed, with the average cost in Canada jumping to $1.26 a litre that week, and some cities seeing gasoline selling for more than $1.49 a litre.
Prices posted yesterday easily eclipsed those records. Two stations in Stratford posted a price of $2.24 a litre.
In suburban Montreal, drivers were paying as much as $1.95.
In the Halifax area, long lineups formed at several gas stations as rumours of $2-per-litre gasoline swept the city.
“It's crazy. It's just a lot of fear, panic and rumours going on,” said Steve Ecclestone, general manager of Ultramar, adding that his Montreal-based company is monitoring the Maritime market closely and wasn't planning any immediate increases.
Unlike the price spike of early September, however, yesterday's run-ups at the pump were not widespread, and not linked to any increase in wholesale prices.
Dane Baily, vice-president of the Canadian Petroleum Products Institute, said the arrival of $2 a litre gasoline was “rather inexplicable pricing” that was not matched by a rise in wholesale costs.
However limited, the sudden surge in prices occurred at an awkward moment for oil companies.
The spike came just as a parliamentary committee held a one-day hearing on the industry.
“Some of the MPs' BlackBerrys were buzzing and they were posing questions about it,” Mr. Baily said, adding that he believes independent retailers, not large integrated oil companies, posted the large price increases.
(Some stations that use the brand names of major companies are owned and operated by individuals.)
Oil companies and industry associations told MPs that pump prices are a function of supply and demand and that the oil industry is very competitive.
Brian Maynard, a vice-president of the Canadian Association of Petroleum Producers, said Canada produces only about 3 per cent of the global oil supply, so little —short of tax cuts — can be done domestically to affect pump prices. “Everyone needs to bring on more supply.”
Mr. Maynard said it's likely that Canadians will be paying even higher pump prices in the coming months as developing countries increase global demand.
Meanwhile, Ontario Premier Dalton McGuinty called on the federal Competition Bureau to launch a new probe on why prices jumped so quickly, and why they rise more quickly than they fall.
“I think there's something fundamentally wrong there, and we deserve to have some answers,” Mr. McGuinty said yesterday in Kitchener, Ont., where he is attending a Liberal Party caucus retreat.
The Competition Bureau has reviewed the industry five times in the past 15 years and found no evidence of price collusion.
While energy prices were bringing more pain in the East, there was more gain in Alberta, where Premier Ralph Klein said that the province's budget surplus could head as high as $8.8-billion in this fiscal year, more than three times the official estimate in late August.
That could leave up to $6-billion in what the government calls its “unbudgeted surplus” to split between spending on infrastructure, savings and a $400 payout to Albertans — with those cheques hitting mailboxes around Christmastime.
Mr. Klein said yesterday that there is a better-than-even chance of similar payouts in coming years if commodity prices remain high. And he hinted in a speech to the Global Business Forum in Banff, Alta., that his government could cut taxes, with a review kicking off next month.
The Alberta Premier said he will be heading east in November, speaking in Ontario and perhaps Quebec and Atlantic Canada, in part to explain to the rest of the country that it should not attempt to confiscate the province's energy bonanza.
But worry over high energy prices is growing in Ontario. Mr. McGuinty warned that the pain consumers are feeling at the pump threatens to hurt the province's overall economy, and result in higher prices for other products and services as companies pass on their rising costs to consumers, he said. “It's going to have a far-reaching impact.”
With reports from Katherine Harding in Edmonton, Karen Howlett in Kitchener, Ont., Oliver Moore in Toronto, Simon Tuck in Ottawa and Canadian Press
BY: PATRICK BRETHOUR
Globe and Mail (http://www.theglobeandmail.com/servlet/story/RTGAM.20050923.wxgas-prices23/BNStory/National/)
Friday, September 23,2005
A wave of panic buying drained gas stations across Eastern Canada yesterday as motorists scrambled to fill up their tanks, driven by the fear of another hurricane-induced price spike.
From Windsor in Southwestern Ontario to Halifax, a relic of the 1970s energy crisis suddenly reappeared: A lineup at the gas pump.
A handful of retailers fuelled the frenzy by jacking up pump prices to unprecedented levels, as high as $2.24 a litre in Stratford, Ont. But many kept prices steady, and then watched as drivers buying up comparatively cheap fuel bled their tanks dry.
One major wholesaler, Bradshaw Fuels, said 30 of the 120 retail sites it supplies in Southwestern Ontario ran out of gas by yesterday afternoon. The remaining 90 are in danger of doing so today, the company said.
“There's consumers going crazy, lined up down the street,” said one official with the firm, adding that she believes the broadcast media created the panic by telling drivers to fill up now to avoid a spike in prices that could come if hurricane Rita wreaks further havoc with the oil industry in the southern United States.
Three weeks ago, hurricane Katrina did just that, wrecking oil platforms in the Gulf of Mexico and, even more importantly, devastating refineries along the coastline.
Wholesale commodity prices soared that day, and pump prices soon followed, with the average cost in Canada jumping to $1.26 a litre that week, and some cities seeing gasoline selling for more than $1.49 a litre.
Prices posted yesterday easily eclipsed those records. Two stations in Stratford posted a price of $2.24 a litre.
In suburban Montreal, drivers were paying as much as $1.95.
In the Halifax area, long lineups formed at several gas stations as rumours of $2-per-litre gasoline swept the city.
“It's crazy. It's just a lot of fear, panic and rumours going on,” said Steve Ecclestone, general manager of Ultramar, adding that his Montreal-based company is monitoring the Maritime market closely and wasn't planning any immediate increases.
Unlike the price spike of early September, however, yesterday's run-ups at the pump were not widespread, and not linked to any increase in wholesale prices.
Dane Baily, vice-president of the Canadian Petroleum Products Institute, said the arrival of $2 a litre gasoline was “rather inexplicable pricing” that was not matched by a rise in wholesale costs.
However limited, the sudden surge in prices occurred at an awkward moment for oil companies.
The spike came just as a parliamentary committee held a one-day hearing on the industry.
“Some of the MPs' BlackBerrys were buzzing and they were posing questions about it,” Mr. Baily said, adding that he believes independent retailers, not large integrated oil companies, posted the large price increases.
(Some stations that use the brand names of major companies are owned and operated by individuals.)
Oil companies and industry associations told MPs that pump prices are a function of supply and demand and that the oil industry is very competitive.
Brian Maynard, a vice-president of the Canadian Association of Petroleum Producers, said Canada produces only about 3 per cent of the global oil supply, so little —short of tax cuts — can be done domestically to affect pump prices. “Everyone needs to bring on more supply.”
Mr. Maynard said it's likely that Canadians will be paying even higher pump prices in the coming months as developing countries increase global demand.
Meanwhile, Ontario Premier Dalton McGuinty called on the federal Competition Bureau to launch a new probe on why prices jumped so quickly, and why they rise more quickly than they fall.
“I think there's something fundamentally wrong there, and we deserve to have some answers,” Mr. McGuinty said yesterday in Kitchener, Ont., where he is attending a Liberal Party caucus retreat.
The Competition Bureau has reviewed the industry five times in the past 15 years and found no evidence of price collusion.
While energy prices were bringing more pain in the East, there was more gain in Alberta, where Premier Ralph Klein said that the province's budget surplus could head as high as $8.8-billion in this fiscal year, more than three times the official estimate in late August.
That could leave up to $6-billion in what the government calls its “unbudgeted surplus” to split between spending on infrastructure, savings and a $400 payout to Albertans — with those cheques hitting mailboxes around Christmastime.
Mr. Klein said yesterday that there is a better-than-even chance of similar payouts in coming years if commodity prices remain high. And he hinted in a speech to the Global Business Forum in Banff, Alta., that his government could cut taxes, with a review kicking off next month.
The Alberta Premier said he will be heading east in November, speaking in Ontario and perhaps Quebec and Atlantic Canada, in part to explain to the rest of the country that it should not attempt to confiscate the province's energy bonanza.
But worry over high energy prices is growing in Ontario. Mr. McGuinty warned that the pain consumers are feeling at the pump threatens to hurt the province's overall economy, and result in higher prices for other products and services as companies pass on their rising costs to consumers, he said. “It's going to have a far-reaching impact.”
With reports from Katherine Harding in Edmonton, Karen Howlett in Kitchener, Ont., Oliver Moore in Toronto, Simon Tuck in Ottawa and Canadian Press