Gasoline Prices should ease..

The question is when and why they went up so high and higher here than near the hurricane location. I think the anser is obvious. Refiner margins have been low. Hurricane Ike and the much lower cost of oil have provided an opportunity to increase those margins and that is what is happening now. The price of oil continued to go down as Ike approached but the price of gas skyrocketed. The free market forces don't seem to be working just the quest for profit forces.


Gasoline prices should ease TheStar.com - Canada - Gasoline prices should ease

AARON HARRIS/TORONTO STAR
But Liberal MP wonders why rise in gas prices was so much lower in Ike-battered Texas
September 14, 2008 Precious YutangcoStaff Reporter
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 MP 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.