Page 23 - Newcom

OPINION
Petrol Points
Western Canada’s 8%
gas price spike, while
Ontario’s goes down
If you thought that one elephant in the room was a “what’s-that-thing- doing-in-the-room?” conversation topic, how about two of them?
No insult by inference, but this week’s eight cents or so gasoline pump price spike that was levied on consumers across the Prairies and Vaincouver (not a typo), has drawn sweat beads and frothy mouth syndrome from the ( for a little while longer) premier of B.C., John Horgan. Horgan claims that these increases are clearly price gouging by the oil companies and not due to higher taxes, and he wants the gov- ernment to investigate and stop this pump robbery.
But he is the government! Unless he wants his new buddy in Ottawa (if it doesn’t move, nationalize it) to intervene and drop the GST and the federal excise tax; and while he’s at it maybe the prime minister could set up controls, or, dare I say, caps on refining margins, retailer pump margins, and why stop there... world crude prices.
What Mr. Horgan could do all
by himself is drop the 7.8 cents per liter carbon tax, which is no longer revenue neutral, but now in revenue overdrive to the government coffers.
The second elephant is what poli- ticians can’t see with these “crimi- nal” actions by evil oil.
Prices spiked, in my opinion, because there has been a price war raging in the west for two months now, which has been centered around pump margins – the gross margins that retailers need to cover all expenses, leaving what’s left as profit. These margins have been
in and around four to six cents per liter in all areas except Vaincouver.
The national average is 12 cents, so the market corrected itself as retail- ers waved the white flag to end the war and put food on the table again.
There may be more correction on the way that will bring more pain at the pump because of the shutdown of the 360,000 bpd Syncrude opera- tion in Edmonton.
As mentioned in a past report of mine, this volume of crude nor- mally ends up in Cushing, Okla., the holding tanks for the West Texas Intermediate (WTI) futures contracts. A drop in supply of
this magnitude will lower futures inventories and force crude,
rack, and pump prices up as a consequence.
With the Syncrude supply cut off, this does, however, free up pipeline space for Western Canadian Select (WCS), which is good news for western producers, as it will cut the WCS to WTI discount.
Roger McKnight is the chief petroleum analyst with En-Pro International Inc. Roger has more than 25 years of experience in the oil industry. He is a regular guest on radio and television programs, and is quoted regularly in newspapers and magazines across Canada.
On the flip side, a key ingredient in the crude oil pricing formulation built into pump and rack prices is WCS, so the higher WCS price will be bounced into those prices. This could increase prices from B.C. to Ontario, but have no influence on prices in Quebec and the Maritimes because these areas use Brent as the pricing co-efficient, not WCS/ Syncrude blend.
A change in government in Ontario will see the cap and trade program evaporate.
With most of the country seeing higher prices in the immediate future for gasoline and diesel racks, such will not be the case in Ontario where prices will fall by 4.2 and six cents respectively.
Seems to me you can just be
the elephant in the room and do nothing for the consumer, or the smartest elephant in the room like the one in Ontario. TW
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THIS MONTH’S CROSSWORD PUZZLE
Across Down
1 Trucking industry health indicator (3,5,5)
8 Pistons’ jewelry
9 GPS predecessor (4,3)
10 International vocational tractor line (1,1,6)
11 ’60s “Put a tiger in your tank” brand
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17 Paper or electronic daily diaries
19 Coiled tractor-to-trailer cables
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2 Wolverine Freight System HQ city
3 International regional haul tractors (1,1,6) 4 Concord, ON-based ____ Transport
International
5 In-bond trailer attachment
6 Brides’ white wedding wheels, briefly 7 Fuel theft tools
12 Auxiliary axle description, often 13 Forklift-friendly cargo platforms 15 Peterbilt sleeper with ‘94 debut 16 West Coast or convex item
18 Road inclination
20 Wide base tire, a.k.a. ____ single 21 Octagonal sign command
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August 2018 • Truck West 23
TW-182 Aug. © 2018 M. Jackson
Answers on page 37