Prices may come down early in the week
Sep 14, 2008 - 01:16 PM
Precious Yutangco
Oil refineries and gas producers along the Gulf Coast have reopened
in the aftermath of Hurricane Ike and while the estimated damage
remains small, there's no guarantee that there will be immediate relief
at the pumps, said Liberal incumbent for Pickering-Scarborough East Dan McTeague.
McTeague, who has
built up a reputation for forecasting gas prices, said drivers
shouldn't expect any changes until Tuesday morning and even then, he's
not sure they will reflect market values.
Gas prices jumped 12.9
cents on Friday morning as officials braced for the arrival of Ike,
which was expected to make landfall as a category 3. Gas went up
another 1.6 cents on Saturday morning after the storm hit Galveston,
Texas.
While it did leave a trail of destruction and caused at least four deaths in the United States, it was only a category 2.
Even
more surprising, said McTeague, is that gas prices in the area where
Ike hit only went up around five cents a litre, almost 70 per cent less
than the total increase in Canada over the weekend.
"According to price, you would think Canada was hit with the hurricane, not Texas," McTeague said.
"The highest price they saw anywhere in the Texas region, in the coastline, was about 20 cents more a gallon (3.78 litres)."
Almost
20 per cent of the United States' oil refining capacity was shut down
in preparation for the storm, however, crude companies in the Gulf
Coast resumed operation yesterday afternoon.
According to
McTeague's sources, the most that oil companies have to deal with is
flooding, adding that they adhered to strict guidelines to keep damage
at a minimum.
"I don't expect much disruption," McTeague said.
"They shut down properly and reopened in accordance with safety and production so, many of them can respond rather quickly."
Because
offices were closed over the weekend, the first opportunity to dictate
a new price will be on Monday morning, said McTeague. This means new
prices won't be in effect until Tuesday morning.
While he expects prices may go down, by how much is another question.
"Without
having an oil price monitoring agency ... we won't know what the
wholesale average is in places like Toronto," McTeague said.
In the past, he said, profit margins were only two or three cents above market value.
"We're
now, in effect, 30 cents a litre above world market prices," he said,
adding that he wasn't optimistic that prices would be down to where
they should be.
Come Monday night, McTeague said, if it looks
like prices won't reflect what they should be, he will be publishing a
breakdown of what drivers are paying for Tuesday morning. It will
illustrate the cost of crude and production versus profit.
The best thing to do for now, he said, is to keep demand low.
"Don't buy any more than what you need," McTeague said. Wait until Tuesday, he suggested.
On
Friday, McTeague said there was no correlation between the price of
crude per barrel and the amount drivers were paying per litre.
On
Wednesday, OPEC reported that crude dropped to $96.80 (U.S.) a barrel,
yet motorists were still paying around $1.23 per litre on Thursday.
-- Torstar news services
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