Price gouging at the pumps...

[Squatch]

Link

The light rain in Toronto yesterday morning was the last feeble breath of Hurricane Katrina, which earlier devastated the Gulf Coast of the United States, some 2,100 kilometres away. Yet gasoline prices in the Toronto area and throughout Canada spiked as much as 20 per cent yesterday morning from Wednesday night. At some downtown Toronto stations, regular gasoline was selling for $1.20 a litre.

Looking for a reason why this was happening, a member of the Star editorial board drove from station to station, asking operators why their prices were so high. The answer was always the same. As one station manager told the Star, the order to jack up prices came from the oil company.

What has risen is the price of crude oil, which has increased by about 8 per cent to nearly $70 a barrel since Hurricane Katrina hit.

Oil companies say crude oil costs account for 42 per cent of the price of a litre of gasoline, which implies the post-hurricane spike in crude prices should not have pushed gasoline prices up more than 3 per cent.

[Squatch]

1. Well, that fell off the first page in about 30 seconds.

[Squatch]

2. Last kick before I let this thread die an anonymous death

[ohio_liberal]

3. Yes, absolutely....

Any gas station that belongs to a chain, like BP or Sunoco, has prices set by the corporation. The local owners/operators do not determine the price per gallon.

[movie_girl99]

5. so chains that are franchised out

do not set their own prices?

[MercutioATC]

4. The price of crude is only one factor in pump price.

Some other factors (all of which are an issue since the hurricane) are:

1) Saudi oil ($70/bbl) is heavy oil. It's harder to refine. Oil from the gulf is lighter, and that's what's in shorter supply right now.

2) Refining capacity has been diminished. It doesn't matter how much iol you have if you can't refine it.

3) Distribution capacity of petroleum products has been diminished. Colonial reopening their pipeline yesterday was a good first step, but even that pipeline will be operating at half capacity or less for at least two weeks.

There's a lot more to it than just the price of Saudi crude.