With good reason, motorists feel ripped off when they fill up with gas.
Since the start of 2021, gasoline at the pump has exploded 95%, from 111.8 cents to 217.9 cents, up 106.1 cents per litre. Analyzes predict that we will soon exceed $2.30 per litre.
To justify the recent surge in the first five months of the year, any reason is “good” to allow oil companies to further siphon off motorists.
I am thinking, among other things, of the European embargo on Russian oil following the invasion of Ukraine by Vladimir Putin, of the surge in the barrel of oil which resulted from it, of the oil refineries which are operating at full regime and who are struggling to meet global demand since the embargo on oil from Russia, inflationary pressures, etc.
As if by chance, hardly a word is said about the voracious appetite of the oil companies to take advantage of the embargo on Russian oil and thus line their pockets with immense profits.
AT THE THANKS OF NEW YORK
A barrel of US WTI oil is trading today at US$119, compared to US$49 at the start of 2021, an increase of 145%.
It is this same increase that has been passed on in the calculation of the “Minimum Acquisition Cost”, which represents the wholesale price of a liter of gasoline at the loading rack in Montreal. This “wholesale price” contains the cost per barrel of oil and the refining margin.
The problem? Although Canadian oil is cheaper than WTI and much of the refining takes place at our refineries, the “minimum cost of acquisition” in Quebec is based on the price of gasoline at the Port of New York, which is based on US WTI.
The reason given? We must follow the world market! Final point.
OPERATORS
Everyone in the oil industry, from producers to refiners to major distributors, has been doing gold business for the past year. While it is true that oil companies reported heavy losses in 2020 due to the COVID-19 pandemic, let’s say they managed to recover royally in 2021.
Take Suncor Energy, our big oil company which is present at all levels of the oil chain (exploration, production, refining, distribution), its profits could reach $11 billion this year, according to analyst forecasts spotted by Zonebourse . This is more than twice the $4.1 billion in profits collected in 2021.
The other major oil company on Canadian soil, Imperial Oil Limited, could record $6.2 billion in profits, or 2.5 times the profits earned last year.
Valero Energy Corporation, which owns and operates the Jean-Gaulin refinery in Lévis, is expected to see its profits possibly surpass the $6.5 billion mark in 2022.
Internationally, let’s take Shell PLC as an example. Analysts say its profits could surpass the $40 billion mark this year.
This is the big jackpot for all oil companies, without exception.
While motorists are literally being siphoned off at the pumps, oil company shareholders are getting richer.
The energy sector sub-index is up 43% since the start of the year. And this after a gain of 42% in 2021.
SURCHARGE THE OIL COMPANIES?
Boris Johnson’s government intends to impose an exceptional tax of 25% on the profits of oil and gas companies, with the aim of returning the fruit of this measure to the poorest households.
Here in Canada, the imposition of such a tax on the profits of our oil companies could be passed on to motorists!
