• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Average Canadian Gasoline Price Jumps 22 Cents to Record $1.26 Per Litre

Posted on: Tuesday, 6 September 2005, 21:00 CDT

CALGARY (CP) - Canadian motorists paid a record average of $1.26 per litre of regular gasoline last week as pump prices soared across the country in the wake of hurricane Katrina's damage to the oil and gas industry along the U.S. Gulf Coast.

The latest weekly survey showed gasoline prices rise 22 cents per litre to the highest average in Canadian history.

M.J. Ervin, the Calgary-based firm that tracks Canadian retail fuel prices, said fuel prices should begin to fall lower as affected refineries re-start production and demand drops after the busy summer driving season.

But don't expect it drop quickly.

"We are in a situation where inventories have been severely stressed, it'll take some time to climb back out of that," president Michael Ervin said Tuesday afternoon.

"I don't think we're going to see a return to pre-Katrina levels for gasoline prices even with crude prices holding steady."

The price for oil continued to drift lower Tuesday, with the October contract for light sweet crude oil on the New York Mercantile Exchange dropping $1.61 US to $65.96 US per barrel.

According to the Ervin survey, drivers in Gander, NL, paid the highest for regular gasoline at nearly $1.50 per litre.

Edmontonians paid the lowest in Canada at $1.10 per litre.

The Canadian Petroleum Products Institute, which represents Canada's largest refiners, warned that the continuing tight supply of refined fuels could keep prices high.

Ted Stoner, CPPI's western division vice-president, said declining oil prices won't be much of a factor "unless either the supply of gasoline and diesel go up or the demand goes down."

Stoner said about nine major refineries have been taken off line since Katrina swept through the Louisiana area last week. That's about 10 per cent of U.S. refining capacity or the equivalent of Canada's total gasoline output.

Some of those refineries are getting close to resuming production, but exact timelines are unknown.

Gasoline demand in Canada is also expected to diminish, now that the traditionally heavy driving months of July and August are over. But Stoner said that usually takes a few weeks into September before much impact is seen.

Jane Savage, president of the Canadian Independent Marketers Association, said she didn't expect gasoline prices to drop anywhere as quickly as they rose last week.

Savage said wholesale prices of gasoline, set by main refiners like Petro-Canada, Shell and Imperial Oil, went up higher and faster than could be justified by Katrina's damage.

"On the way down, wholesale prices aren't moving as fast, so there's more opportunistic profit-taking happening by the Canadian refiners because they're not moving the wholesale prices down as fast as they're moving down in the U.S.," said Savage from her Toronto office.

She said that independent retailers "are hamstrung by this handful of oil companies who are controlling the wholesale market."

Richard Taylor, deputy commissioner of Canada's Competition Bureau in Ottawa, said his office is keeping a close watch on Canadian versus U.S. prices to make sure that cost increases are due to market forces and not anti-competitive behaviour.

"It's a little early to tell what has happened within five or six days, but we're looking at it closely," said Taylor.

"If prices got out of whack and stay out of equilibrium for a long time, then we'd want to know why and we'd go and find out why."

Taylor said there were "very serious consequences" for price fixing, but proof would be needed.

"If it's just what the market will bear, some people call it gouging, there's nothing we can do about that," he said.

"There's no law against charging high prices in times of shortages."

Several previous investigations of the gasoline industry by the Competition Bureau have concluded there was no evidence of price fixing.

Source: Canadian Press

More News in this Category