$1.50 per litre gas possible - analyst

Ford dealership owner Pat Monahan has adjusted his inventory in the last year to reflect the trend away from sport-utility vehicles and towards crossover utility vehicles. Sales of full-size trucks remain strong, as they are used heavily for personal and commercial use. Sales of the compact Ford Ranger compact pickup are also strong.

Mac Olsen
South Peace News

Consumers should expect to pay as much as $1.50/litre for fuel later this year, as worldwide demand for oil continues to outstrip supply. The CBC News website, CIBC World Markets, an investment banking firm for the Canadian Imperial Bank of Commerce, issued a report in early January stating there would be a growing gap between oil supply and demand. This would drive fuel prices in Canada to $1.50/litre “in the near future.” Area residents say this will alter how much they drive if predictions come true. They would reduce their shopping trips to High Prairie and likely cancel summer trips or take shorter trips. Most interviewed also say they would like the federal and provincial governments to reduce their fuel taxes to alleviate the situation. Freivald Lind is semi-retired and lives outside High Prairie but comes to town to work. He drives a pickup for personal use which his employer compensates him for. He bought a motorhome six months ago, but would not travel as much if the price goes up. He is resigned to fuel prices going even higher. “You do think about it twice. But, really, what can you do about it?” says Lind. Iris Anderson is a single mother with three children who resides in Gift Lake. Any fuel price increase affects her finances significantly. “That would be drastic in my situation,” says Anderson. “As it is now, at $1.05/litre, it’s still hard to make ends meet.” She does a lot of shopping in High Prairie. She spends $100 or more per month on fuel now and would reduce her shopping trips to High Prairie from twice per month to once per month if prices increase. Anderson would like the federal and provincial governments to reduce the fuel taxes because it would help her financially. “I hope the government realizes how much impact (the fuel prices) have caused on people trying to make ends meet,” says Anderson. As for summer travel plans, she takes her children camping up north. But this year’s camping trip could be cancelled if fuel prices increase. Lance Cunningham lives in Peavine and now spends approximately $200 per month on fuel. He comes to High Prairie twice a week for shopping, but would likely reduce it to once a week if fuel prices go higher. As for summer travel plans, he would likely cancel his vacations if this was to occur. Cunningham also calls on the federal and provincial governments to reduce the taxes on fuel. “We shouldn’t have to pay so high a price,” says Cunningham. “We should have a cheaper rate, especially in Alberta.” As for the impact on businesses, High Prairie and Area Chamber of Commerce president Gord Olson is not too concerned. “It’s going to impact all segments of our economy to a certain extent. “Does it spell economic doom? I don’t think so. But it’s probably going to mean some belt tightening for most businesses, particularly if there’s transportation involved.” Century 21 Sunnyside Realty owner Olson transports a lot of clients in his business. His bottom line will be “a little tighter” if he has to pay $1.50/litre. He also calls on the federal and provincial governments to reduce the fuel taxes. “We’ll definitely be talking to our government to say that we need some sort of relief. In great economic times that they are, decreasing the tax load on the fuel might be nice.” Monahan Ford dealership owner Pat Monahan is not too concerned about rising fuel prices either, as they have not hurt his vehicle sales. Monahan has noticed the trend moving away from sport-utility vehicles (SUVs) and into the crossover utility vehicles (CUVs), and he has adjusted his inventory accordingly. Sales of the Ford Ranger compact pickup and F-Series pickups remain strong. Full-size pickups are used a lot for personal and commercial purposes, and truck sales across Alberta are strong, he adds. Rising fuel prices have not impacted sales of his Kawasaki line of quads either. Whatever happens, world oil production and consumption affect prices here at home. CIBC World Markets says increasing oil demand in developing countries, the depletion of oilfields and delays in getting new oil fields into production will constrain supply growth over the next five years. The result will be an increase of over three million barrels per day by 2012, well below the 10-million- barrel-a-day estimate issued by the International Energy Agency. This could mean a price of $150 US-a-barrel within five years, says CIBC World Market chief economist Jeff Rubin. The investment bank came up with these estimates following a review of almost 200 new oil projects expected to begin operating by 2012. But, it also says many oil project operators are too optimistic about when production will begin. Ted Stoner doesn’t think much of the investment banking firm’s forecasts. The price of fuel at the pump depends on several factors that do not necessarily occur all at once, says Stoner, vice-Presi- dent, Western Division, Canadian Petroleum Products Institute in Calgary. These are the raw material cost; the North American market for wholesale products (diesel or gasoline), which this is driven by speculators on the Mercantile Exchange in New York; and local competition. These factors do not necessarily work in unison. “There are so many variables, it’s very difficult to make any assumptions,” says Stoner. “CIBC has obviously made some assumptions, and then based their report on that. That’s fine. “That’s their opinion and that one opinion makes good media coverage.” Stoner says the CPPI does not make predictions because they will probably be wrong. The price of oil has been struggling to remain at $95 US a barrel and who knows when it will go over $100, says Stoner. He also says that CIBC World Markets is making its forecast based on a worst-case scenario.

Copyright © 1999-2005 South Peace News. All Rights Reserved.
No part may be reproduced without written permission.

View our Privacy Statement.
Send website suggestions to the Webmaster