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What’s behind gas price hikes? Oil company greed: Analyst

En-Pro International says no reason for the recent price hike.


September 13, 2012
by CANADIAN PRESS

MONTREAL — One industry analyst has a simple explanation for the higher gas prices that jolted motorists Sept. 12 in major Canadian centres: “greed.”

The shock at the gas pumps was particularly acute in Montreal, where prices soared by as much as 13 cents a litre. The price of regular in the Montreal area was set at just under $1.53 a litre, an increase of almost 20 cents since the start of summer.

Gasoline prices across southern and eastern Ontario also rose by about 3.4 cents, according to the website tomorrowsgaspricestoday.com. That put the price of regular in the
greater Toronto area at just under $1.37 a litre, and $1.34 in the Ottawa area. In the greater Vancouver area, prices ranged from $1.36 in Burnaby to $1.42 in Richmond, with smaller fluctuation in recent days.

Roger McKnight of En-Pro International says he’s checked over a number of the usual factors – like supply and demand, refinery problems and inventories in the US – all of which dictate prices in Canada.

“There’s no reason for (gas prices) to be going up,” he said in an interview. “None whatsoever.”

McKnight, an independent industry analyst whose company is based in Oshawa, Ont., says prices should actually have gone down because the Canadian dollar has increased in value.

“When the Canadian dollar goes up in value, your prices should actually be dropping, but they actually went up,” he said. “So I’m going to have to use the word, ‘greed,’ insofar as the oil companies are concerned.

He said that when it comes to refining capacity, Canada suffers from a lack of competition because it has only 14 refineries. The US, with just over nine times the population size, has more than 10 times the number of refineries – 144 of them – according to the US Energy Information Administration.

Another analyst who provides services to the industry offers a more generous interpretation for the price hikes. Jason Parent is with Kent Marketing of London, Ont., which offers data and consulting services to the petroleum sector.
He says there are good reasons for the increase in gas prices – and “sometimes you have dig and scratch to find them.”

Parent says wholesale prices have been coming up over the last week and significantly so in the last few days, with several factors coming into play.

“One (factor) is the refineries that were shut down because of the hurricane in the southern (United) States,” he said in an interview.

“They are back on line but that put a huge crimp in the supply which flows all the way up the eastern seaboard in the US and into Canada.”

Parent says there have also been refinery issues in the Detroit and Chicago areas where there were planned shutdowns for various reasons, including maintenance.

“That’s what’s driven prices up recently – despite the fact that the price of crude has been relatively steady,” he said.

© 2012 The Canadian Press