Oil Prices Make Me Feel Greased
Okay, I have just about had enough. The other day we are all hit with a 12 cent per litre ransom on the gas we purchase. Why? Because the refiners wanted to make more money. Now I am ususally a stallwart defender of business and the free market system, but not this time. We have a situation of an Hurricane approaching the oil refining facilities in the Gulf and some of the refineries shut down operations to ride out the storm. There was never a North American run on gas. There were never any shortages outside of the Southern Texas area, and yet the spot market price went through the roof. Some might like to know that the jump in spot market prices were only for Gulf States delivery. Needless to say that we are not a Gulf State. Yet here in our little Province, and the rest of Canada as well, we were told we had to pay more. The paper even reported Michael Collins of Wilson Fuels stating that on Friday morning, his trucks were shut of at the rack at the Esso refinery in Eastern Passage.
If I was Mr. Collins I would have gone over to the refinery with a big gun. Now, if there was any chance that the gasoline in Esso’s storage tanks could possibly make their way to the Gulf States, (Who pays for shipping? Canada Post might be the most reasonable) I could understand Esso saying to the people of the Province that they had a better deal for their gas elsewhere. But, this gas wasn’t going anywhere. It was staying right here, ready to go into your tank at whatever price Esso deemed appropriate. Hey, wait a minute. We have regulation. Our vigilant Premier and the rest of the Government are looking out for us by regulating the price and making sure we don’t get the short end of the stick. Right? Well, the price stability promised by regulation goes right out the window when the “Interrupter Clause” gets used. What the hell is that?! A clause that allows price instability? Had the Government had the cajonnes to stand up to the oil companies we would have seen that by Monday all the fear was gone and everything was getting back to normal. Spot prices dropped dramatically. When is the Interrupter Clause going to be used to drop the prices back down? Who knows?
If it wasn’t enough that the Government and Refiners are giving me gas, NSPI gets together with its cronies to hammer out a deal to raise electricity rates by 9.3%. Why? Because their fuel bills have increase dramatically over the past year. Sure oil, coal and all other commodities have spiked over the past year, but as all are starting to come to realize it was a result of a speculation bubble rather than supply and demand fundamentals. By the way, that bubble burst in July, when oil was at $147 a barrel and gold was approaching $1000 an ounce. Sure the NSPI claim sounded pretty reasonable back then. But now we are looking at $93 a barrel oil and no indication that it won’t continue to fall further. Would NSPI launch a review before the UARB today for 9 – 12% based on rising fuel costs? I don’t think so. They might get laughed out of the room. So what do you do if you are NSPI and the basis of your 12% claim is looking shaky? You do a deal to lock in rates with your biggest customers and go for a smaller increase of 9.3%. That’s an easy one to sell. Hey everybody, we needed 12%, but with our hard work and negotiating skills we can let you off with an increase of 9.3%, which if oil prices keep tumbling will be pure profit for us, but oh well, 9.3 is better than 12. You can bet the bigger guys have a clause that if fuel costs go down they can renegotiate. But for everyone else, we just have to pay. Hey, UARB! Show some leadership here. Put a stop to this and tell the NSPI that you will revist it if prices come anywhere near the levels they were when NSPI decided they needed the increase. Or, give them the increase based on a certain world oil price. If it doesn’t maintain that level NSPI has to give the increase back.
Sure, like that will ever happen. Until then,
A Sour Kraut