Fuming about fuel prices? Don’t blame the refiners

OSHAWA (July 28, 1999) — With national average fuel prices spiking to their highest levels in nearly a year and a half recently, gasoline buyers are fuming and the trucking industry lobby is warning that retail store prices could soon reflect the ripples of higher diesel costs.

But don’t blame refiners for higher retail and wholesale fuel prices. Blame the Canadian dollar.

“The Canadian dollar is in the dumpster, which means that the barrel of oil we see at $19 or $20 dollars is really like $29.85 with the exchange,” said Terry Slack, vice-president of En-Pro International Inc., an energy-market watchdog based in Oshawa, Ont.

“Back in February, when the price was down, the fuel companies were selling gas at 48 cents. They were selling below cost. The oil companies, despite the hefty profits they’ve reported recently, can keep that up for only so long.

“Take that barrel and divide by 159 (the number of litres in a barrel of oil), add on cost, and the price they’re charging is bang right on.”

However, consumers are right to be upset about 10-cents-per litre price spikes almost overnight in some parts of the country, he noted.

Slack said diesel prices should stay relatively stable in the near term. “On the trucking side, prices have gone up in part because around the world and here in North America we’re seeing more smaller trucks go to diesel, and the summer usage of diesel has gone up as trucking activity has increased,” he said.

“But (the price of) diesel hasn’t gone up (as much as gasoline) because the reserve hasn’t been eaten up as quickly.”

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