Tuesday, August 08, 2006


One day after BP's announcement about the Alaska pipeline closure that energy analysts said won't affect fuel supply, gas prices are up over 4cents/litre. Even though energy analysts said this closure won't affect supply. And not only that, but energy analysts said the closure won't affect supply!

No, my pre-senile dementia hasn't progressed to the point where I'm repeating myself. I'm just wondering why, if the markets are so sensitive that they react to any threat of disruption, they're not sensitive enough to pick up on the assessment by industry professionals that this closure is a relatively insignificant event from a supply standpoint. It's as though everyone stops listening as soon as they hear the word "closure"... ACK! Closure! The sky is falling! I bet this is gonna cost me at the pumps! I understand that oil is a futures market and is affected by world events, wars and so on -- all valid reasons for price increases (but I'd question the amount of the increases). However, a corroded pipeline is not a war, it's industrial maintenance which every company does on an ongoing basis. It's not a legitimate reason for increasing prices.

In reality, there's no reason for the price of gas to go up because of the Alaska closure. Supply isn't being affected. People aren't suddenly rushing to use more gas than usual so demand is the same. In a free market, does not supply and demand dictate price? And BP certainly doesn't need the consumer to finance the repair of their corroded pipeline, given their second quarter profits of over $6 billion. No, they're manipulating the markets to make more money for the simple reason that... they can. Nobody knows better than the oil companies that the petroleum party's almost over, and the rising prices are their version of having "one more for the road". On us.