Ottawa summons oil execs to explain high prices
CTV News: Consumers aren't buying the reasons for gasoline price hikes 1:45 protesting gas prices in L.A.
CTV.ca News Staff
Consumers are getting pumped up about rising gas prices, which some critics are calling "war profiteering." Oil companies explain that high costs for crude oil means price increases at the pump, but politicians will soon be asking them to justify the price hikes.
Analysts explain that fears of war in Iraq and more than 11 weeks of disruption to oil exports from strike-bound Venezuela have pushed oil prices up by about 45 per cent since November.
After jumping 7 cents in one day, a litre of self-serve regular unleaded is now selling for a record high 89.5 cents in Halifax. In California prices are topping out at $2 US a gallon.
The price hikes have left many frustrated consumers convinced that there is something more sinister behind the price changes. A group of protesters rallied in South Central Los Angeles Thursday, decrying what they call blatant price-gouging by the oil companies.
With a gas price increase of 20 cents US in the past two weeks in 15 cities across the U.S., critics say there's more to it than crude costs.
With no war presently underway, and with a possibility it might never happen at all, many were asking why gasoline prices seem to already incorporate a "war premium." Increasingly vocal critics accuse the oil companies of war profiteering.
At least one independent retailer says markets are over-reacting and prices shouldn't be this high, but the oil industry still points to the rising cost of crude.
Most oil company officials have declined public comment on the matter, but Calgary-based oil giant EnCana Corp. CEO Gwyn Morgan told a conference call that the pump price reflects the sway of international market forces and the high percentage of federal and provincial tax.
EnCana is one of several Canadian oil producers now ringing up big profits. EnCana announced Thursday its profit for the fourth quarter was $429 million, up 376 per cent from the same period a year ago. Earlier this month, Imperial Oil said it posted a 100 per cent improvement with a $454 million fourth quarter profit, and Petro-Canada reported a profit of $370 million, up 393 per cent.
Such healthy performance has done little to quiet the resentment among consumers. While higher energy costs threaten further damage to a U.S. economy, which is already in the doldrums, Finance Minister John Manley insists Canadians should not be worried.
"In the Canadian economy it's kind of neutralized, because we're producers" Manley said. "I think what we have is a short-term spiking in prices that may reverse itself once some of the international tensions have been worked out," Manley told reporters.
Top Canadian oil executives are reluctant to comment, but they won't be able to stay quiet for long. The CEOs of Petro Canada, Sunoco, Shell, Esso and others have been summoned to Ottawa by a commons industry committee looking for the factors driving record-high gas prices. Although the issue has been studied in the past, no investigation has found evidence of collusion or price-fixing.