Government unsure if the expected increase will be passed on to consumers
Richard Gleeson
Northern News Services
Yellowknife (May 14/01) - People in Rae Lakes can only hope that predictions, publicized by southern media last week, of a $1 per litre gas prices this summer come true.
In Rae Lakes a litre of gasoline sells for $1.25. In many Northern communities, $1 per litre would be a bargain. But if southern analysts are right, Northerners will likely be paying higher prices when they fill up their boats and ATVs this summer.
Bill Levy of the Canadian Petroleum Products Institute, which represents refiners and marketers, said if last year's pattern repeats itself, prices should jump this spring.
"A 10 cent increase over the summer is not out of the question," Levy said, adding its always difficult to predict prices in such a volatile market.
Apart from some of the larger regional centres, government delivers the fuel and sets the prices in all communities in the Northwest Territories and Nunavut.
Though a price stabilization fund acts as a buffer against volatile world prices, neither government absorbs the cost of jumps in fuel prices.
The NWT government pays the going rate when the barges used to transport fuel to the communities are filled up. Barges headed for NWT communities are transporting from mid-June to September.
The Nunavut government pays the going rate when the fuel barges reach designated resupply points, which occurs from July to the end of October.
If prices jump 15 per cent this year, the NWT petroleum products division would likely ask the Financial Management Board for permission to increase prices in the communities, said director Bev Chamberlain.
"Whether it would be granted or not is something I couldn't speculate on," Chamberlain said.
Normally, NWT and Nunavut fuel prices are set once each year, in November. But in 2000, prices were adjusted twice before that date in the NWT.
In January the FMB agreed to a request to hike prices by 10 cents per litre to offset a loss of economies of scale that came with division. Rising fuel prices prompted another hike of 15 cents per litre in September 2001.
The cost of shipping the fuel to NWT communities will not increase.
Shipping costs are fixed under a contract the GNWT has with the Northern Transportation Company Ltd.
Susan Muckpa, director of the Nunavut petroleum products division, said she could not predict if a hike in world prices this summer would prompt a jump in prices at the pump in Nunavut communities.
She said other petroleum products, such as jet and diesel fuel, have remained fairly stable in comparison with gas prices.
Roy Green, who tracks prices for the division, said prices are definitely on the increase.
But, he added, a lot that can happen between now and when Nunavut purchases its gas for the year.
