Spiking gas prices befuddle fuel users

Saturday, February 8, 2003 www.canoe.ca By CAROL HARRINGTON, CP

CALGARY -- Canadian drivers and businesses that guzzle lots of fuel are pumped with anger over gasoline prices spiking because of war fears and concerns about world oil supply. Dane Baily, vice-president of the Canadian Petroleum Products Institute, said he has had a barrage of phone calls this week over pump prices that jumped at least six cents in some places. "A lot of people want to know when prices are going down," he said. "I do, too." Many of the calls are from Montreal where the country's most expensive gasoline was being pumped yesterday at 88.9 cents a litre. "It's too expensive. It's frightening," Pauline Paquette, a Montreal motorist, said while filling up her vehicle. "It's had an effect on my business," Dennis Doehl, owner of Jay's Moving and Storage, said from Regina where gasoline was 81.9 cents a litre. "When people move, they have to move. It's just sometimes they do it themselves if our prices get too high because of gasoline prices." Energy experts are blaming geopolitical events -- a looming war in Iraq, a national strike in Venezuela that has affected oil production and a 26-year low in U.S. oil inventories. But the pump pain isn't over yet, according to Wilf Gobert, energy expert at Peters & Co. in Calgary. He predicts gasoline prices are likely to leap again if the United States actually attacks Iraq. "An attack on Iraq will temporarily further cause a price shock because everyone will be afraid of what the longer-term implication is," he said. There's also some doubt about whether Venezuela will be able to pump out as much oil as it previously has when the strike ends because pressure in oil wells there has dwindled, Gobert added. The topic of rising gasoline prices was raised in the Commons yesterday when Bloc MP Benoit Sauvageau asked Industry Minister Allan Rock if the federal government plans to do anything about the situation. "The prices are influenced by a whole host of factors and it's a provincial jurisdiction," Rock replied. Baily said provinces rarely get involved in gasoline prices, although the federal and provincial governments collect gas taxes. Gas prices are driven by crude oil, an international commodity that rides on supply and demand. Even though energy companies have been reporting spectacular fourth-quarter results, the bonanza isn't being reflected on the stock market. "Investors are leery," Gobert said. "Oil and gas has a notoriety for its volatility." Ever since oil hit a low of $10 US a barrel in February 1999, prices have increased for the most part -- the longest period of sustained healthy prices since the early 1980s, Gobert pointed out.