Imperial Oil profits likely to increase due to refinery fire

A report out of the Hamilton Spectator today states that it is very probable that Imperial Oil's profits are going to increase due to the Nanticoke fire. According to the article, a Desjardins Securities analyst estimates that Imperial Oil will see a 6% decrease in refining capacity in the first quarter of 2007. On the surface, that doesn't sound like much... but take a look at the price of gas at the pump today and see how "minute" an impact this 6% decrease is actually having.

Perversely, this same analyst speculates that "lost volumes could be more than offset by increased profit margins" -- as Eddie Murphy would say: "SAY WHAT?!"

As I mused to myself in my post last week, the ever-changing deadline to getting Nanticoke back up to 100% production is a hard target to find, let alone hit. They said that things might be back to normal two weeks from now last week. I see today that the aim is still two weeks from now. Who are we to believe, and why should we believe them? After all, operating at reduced production rates is pumping up the profits - why bother fixing anything at all?

Even more perversely, I suspect that each and every gasoline company in Canada will see their profits rise as a result of this Imperial Oil/Esso fire. Shell, Petro Canada and others certainly didn't try to capitalize on the temporary closure of Esso stations last week by wooing customers with the goal of keeping them once Esso gets back to normal. Noooo... they jacked up their prices too! Why not?!

Crude oil closed at $60.07 on NYMEX today. Crude oil was around $60/barrel in the first days of October. Anyone know what we were paying at the pumps that week? Around 83 cents per litre according to historical data on www.ottawagasprices.com. It's still over a buck a litre tonight in Ottawa, same in Toronto. It's more expensive here than in Montreal where gas is currently selling at about 98.4 cents per litre! When was the last time Montreal was cheaper than in Ottawa or Toronto? It's still 89 cents in Calgary and 91 cents in Winnipeg...

I know there's no point in investigating these turkeys - the federal Liberals sure make it look like they tried, to no avail. No price fixing there. No price gouging either, apparently. Consequently, I won't be leading the pack demanding that Stephen Harper and his "new Conservative government" try again. With his Alberta origins, I seriously doubt he'd do anything to draw the ire of the oil industry.

When hurricane Katrina hit the gulf coast, conspiracy theorists were blaming the onslaught of extreme weather on George Bush. I'm starting to wonder if they had a point but were pointing their fingers in the wrong place... could it be that it's the oil companies that are creating these odd weather patterns and rogue refinery fires that are popping up here and there?

I know, I know. The answer is NO, but what else are we supposed to think at this point? Imperial Oil is sure not doing itself a PR favour by appearing to be capitalizing on this incident. Let's wait and see what the quarterly earnings report comes out. Once again, we'll see they've got us by the and there will be absolutely nothing we'll be able to do about it.

Sometimes I wonder how much of a radical capitalist I really am!!!


Hamilton Spectator source article: http://tinyurl.com/39k3od