Soaring gasoline prices fueling consumer anger

www.ctv.ca Canadian Press

Canadian drivers and businesses that guzzle lots of fuel are pumped with anger over gasoline prices that are spiking because of war fears and concerns about world oil supply.

Dane Baily, vice-president of the Canadian Petroleum Products Institute, said he's 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 Friday at 88.9 cents a litre.

"It's too expensive. It's frightening," said Montreal motorist Pauline Paquette she 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 temporary 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 oilwells there has dwindled, Gobert added.

The topic of rising gasoline prices was raised in the House of Commons on Friday, 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 answered.

Baily pointed out that 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.

Oil prices averaged $31 in 2000, $25 in 2001 and $26 last year. Since Dec. 23, oil prices have been above the $30-mark. Friday's price closed at $35.05 US per barrel, up 89 cents.

Although consumers aren't pleased about the recent price spike, the Alberta treasury gains $108 million over one year for every $1 increase in the price of a barrel of oil.

An increase of 10 cents in natural gas prices each year puts an additional $137 million in government coffers.