'Pumps': The story of a gas price hike

www.globeandmail.com By JUDITH TIMSON

Saturday, January 11, 2003 – Page B2

A friend who is a retired oil company executive noticed last week that gas at his Toronto neighbourhood station was 72.9 cents a litre.

Oh good, he thought, I'll fill up the tank on my way home. By the time he returned, an hour or so later, the price had leaped to 77.9 cents. "That's five whole cents!" he said, sounding momentarily affronted.

At least he had what the rest of us are only painfully acquiring: perspective. Having purchased crude oil from the Middle East in the seventies when prices were also wonky, the former executive sighed and said: "Supply and demand."

The story of a gas price hike these days is easily the plot of an international novel of intrigue.

Start in Venezuela, with a rock thrown by a striking oil worker through a window, which then results in enough political and economic instability to cripple the crude oil output, halt exports to the United States and spike up the price per barrel. (It went to $33 U.S. in the past 10 days before settling down around $30).

Segue to the Middle East, where oil sheiks awaiting a possible war in Iraq have gone into hoard mode, and then, cut to Vienna, where the leaders of the Organization of Petroleum Exporting Countries have convened an emergency meeting tomorrow to try to prevent further oil price shocks.

Finally, cue the local price provocateurs of the North American major oil companies, hunched over their computers, deciding daily or even hourly whether our gas should go up or down.

And voilà, a blockbuster novel -- "Pumps." Or perhaps something more dignified: "A Clear and Present Crude Shortage?"

Whatever the title, one of the characters way down the supply chain could be George, my local Petro-Canada dealer, a man of few words, most of them mumbled.

George, whose price was 77.9 cents (Canadian) a litre yesterday, said he gets an automated message from Petrocan, a female voice advising him of the new price.

"It could be in an hour, it could be tomorrow," said George, whose reaction to all the international goings-on was a big shrug. His customers were not complaining he said, because "you gotta fill the tank."

His guy at the pumps even joked: "This is a bargain compared to Italy."

Not too far from George's station was a gentleman who introduced himself as Bawa.

He was presiding over a Tonka gas stand so small it looked like an ice fishing hut.

Bawa said the price was holding at 72.9 cents, and the stand was selling "5,000 more litres per day" than some of the bigger stations.

The price turnaround is happening faster than it used to, and prices are often higher at the start of the week, according to Spencer Knipping, an oil adviser at the Ontario Ministry of Energy.

Mr. Knipping is so passionate and knowledgeable about oil -- his father was a petroleum engineer in Calgary -- that industry insiders call him for stats because, as one lobbyist said, "Spencer knows everything."

"Ah, now here's an interesting spreadsheet," Mr. Knipping said over the phone as he tracked prices.

He said Canadian drivers have been surprisingly tenacious in pursuing a lower gas price, "even if it's just a few tenths of a cent."

Paradoxically, they'll drive farther, or spend valuable time hunting down a bargain. (There are several Web sites that offer price alerts in each province.)

According to Mr. Knipping, the reason your gas price is so volatile is less Tom Clancy than Economics 101. Yes, supply and demand, and international goings on, but mainly tremendous competition at the local retail level.

If price wars don't provide enough drama, the story of gas has also become a morality play. A series of SUV-bashing ads have surfaced in the United States, reportedly depicting people who drive gas-guzzling vehicles as fuellers of terrorism.

My friend, the former oil company executive, filled his tank at his usual place, absorbing the 5-cent-a-litre hike. Like many others, he had better things to do than search out a bargain.

He writes now, and he once even tried to write a novel about the oil industry. "But it seemed so boring."

He should keep trying. It's a heck of a story. judithtimson@hotmail.com