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Father God, thank you for the love of the truth you have given me. Please bless me with the wisdom, knowledge and discernment needed to always present the truth in an attitude of grace and love. Use this blog and Northwoods Ministries for your glory. Help us all to read and to study Your Word without preconceived notions, but rather, let scripture interpret scripture in the presence of the Holy Spirit. All praise to our Lord and Saviour Jesus Christ.

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Tuesday, December 15, 2015

Oil Co.s - Good Corporate Citizens or Greedy, Soulless, Bloodsucking Leeches?

Gas should be much cheaper with fall in oil prices, BMO says

Gasoline should be about 80 cents a litre, if historical correlations between crude and gas held true
CBC News 


Historic trends, if they held true today, should result in gasoline costs closer to 80 cents a litre based on the price of oil, the Bank of Montreal says.

It's not your imagination — gasoline prices in Canada should be a lot lower than they are right now.

That's according to Benjamin Reitzes, an economist at Bank of Montreal, who said the price Canadians pay at the pump should be a lot lower than it currently is based on the plunging price of a barrel of crude.

"With last week's plunge in oil fresh in my mind as I headed into the weekend, I couldn't help but notice how gasoline prices had ticked higher from the previous week," he wrote in a research note on Monday evening.

Despite Canada having one of the world's largest reserves of crude oil in the world, much of the gasoline that Canadians put into their cars — especially in Central Canada and on the East Coast — is based on crude oil that's been imported, most likely Brent crude from Europe.

Many factors go into the price of gasoline, but crude prices are a significant factor. And with crude prices plunging to under $35 US a barrel yesterday — a new six-year low — that should be affecting pump prices.

Except, it's not. At least, not as much as it should be.

"Simply, consumers don't appear to be reaping the full benefit of lower oil prices," Reitzes said, noting that Canadians are still paying more than $1 per litre in many markets, despite Brent crude prices falling to levels they haven't been at since 2008.

The following chart shows what Reitzes is talking about.
The price of gas and the price of oil have diverged this year, as this chart from a recent BMO report suggests.
(Bank of Montreal)

And it is not much different in the USA:

Throughout 2015, and especially recently, Canadian & US gasoline prices have diverged from crude. They are still correlated, but not as closely as they should be.

If historical trends were still true, gasoline should cost about 80 cents per litre in Canada with crude being where it currently is. Yet across the country, the national average gas price was 97.70 cents a litre, according to gasoline price website GasBuddy.com

One more thing - notice in the top chart the relationship between Canadian and American gas prices. Traditionally, Canada has been paying 30 to 35 cents per litre more than Americans, but in the last 2 years that discrepancy has risen to 40 to 50 cents per litre even as oil prices drop. Have refining cost increased substantially more in Canada than in the US?

Christmas bonus
"Talk of a Christmas bonus by way of cheaper gas prices may be disappointing due to weakness in the Canadian dollar and profit taking by speculators and refiners," GasBuddy's senior petroleum analyst Dan McTeague said.

"As most saw crude tumble last week, drivers expected further relief at the pumps, but got a surprising increase instead."

Worse still, the problem shows no signs of abating any time soon. Indeed, it could be about to get worse.

"Drivers in Vancouver and Victoria should look to an average three-cent increase per litre, with Edmonton, Calgary, Regina, Saskatoon, Winnipeg and the B.C. Interior following with an average two-cent bump," by this weekend, McTeague predicts.

"Toronto, Ottawa, London, Hamilton, most of Southern Ontario and Montreal set for a two-cent average hike, while the Maritimes and Newfoundland, which follow last week's market prices, should expect a three-cent increase for Thursday and Friday."

So if you are expecting a Christmas bonus from the oil companies, you had better have shares in them. The names Grinch, and Scrooge, are much too nice to call these wretched, conscienceless, pigs. 

Higher gas prices don't affect society evenly, it affects lower income people much more than others. Oil executives pad their multi-million dollar bonuses at the cost of health, nutrition and mobility of societies most fragile demographics. 

You make me sick! Merry Christmas.



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