THE BRIDGE TO CARACAS (Volume 1 of The King Trilogy)

CHAPTER 38

The Iranian Revolution shook the world when the Shah of Iran was deposed by the Ayatollah Khomeini. The Shah, who had deeply pro-Western sentiments, had passively allowed Iranian crude oil production to exceed five million barrels per day. Until then, Iran's expanded production level had helped to prevent an increasingly thirsty world from experiencing any real shortages. The Ayatollah was convinced that the industrialized world, particularly the United States, had been bleeding Iran dry. He immediately reduced crude oil production in his country by four million barrels per day, which had immediate and dramatic results. World crude oil prices shot up to forty dollars per barrel. Some oil experts confidently predicted that the price of crude oil would soon rise to one hundred dollars per barrel. Refiners were suddenly starved of their usual supply, and horrendous gasoline shortages emerged. Gasoline prices rapidly followed crude oil prices and vehicles lined up for miles at gasoline stations around the world. Consumers had suddenly realized how vulnerable they were to their heavy dependence on oil, and were about to pay dearly for it.

While long line-ups proliferated at gasoline outlets in the United States, Canada was technically self-sufficient in oil. The Pierre Elliot Trudeau-led liberal government of Canada declared that its citizens should not have to pay the outrageous prices demanded by the OPEC countries. Instead, they decreed that Canadians would enjoy a "made-in-Canada price" for crude oil, which was set artificially at a level far below the official world price. Hence, while gasoline prices escalated in the United States, they stagnated in Canada. Suddenly, American motorists raced across border points to buy Canadian gas.

In contrast to Mike's troubled personal life, his business was performing extremely well. The deal with Reserve Oil for thirty million gallons of spot gasoline was enormously profitable, exceeding his expectations by a wide margin. The debt incurred in the purchase of Tom Fletcher's fifty percent interest in the holding company had been paid off, freeing Mike to search for opportunities to expand his business.

The fateful purchase of a gas bar on a large piece of land on the Queen Elizabeth Highway was his first expansion venture. He reasoned that the gasoline outlet, less than five hundred yards from the Peace Bridge and the international border, was ideally positioned to capitalize on the huge gasoline price differentials that had routinely developed from time to time on both sides of the border.

At the end of January, Mike received an urgent call from the manager of his new gasoline outlet in Fort Erie. "Mr. King, it's Darryl Ross in Fort Erie," the young manager said. "I'm sorry to bother you, but I—"

"Don't worry about it, Darryl. Just tell me why you called."

"Something weird is happening here. Someone should come down here and see this. It's unbelievable."

Mike's curiosity was aroused. "What's unbelievable?"

"They're lined up all the way across the Peace Bridge to buy our gasoline. We can't sell it fast enough! We'll sell thirty million gallons this year if this keeps going!"

Mike's initial reaction to Ross's news was excitement. He began to calculate the profits accruing to XG as a result of such a fantastic volume of gasoline sales. His smile disappeared and he stopped calculating when it occurred to him that the reason for the huge increase was the world oil crisis. XG would soon experience a shortage, because all of its gasoline supplies were purchased in the United States.

Ross became impatient. "Mr. King, are you still there?"

"Yes. Sorry, Darryl. I was lost in thought. Listen, can you handle the volume? Do you need more staff?"

"It's like a zoo here, but so far we've been able to handle it. The biggest problem is the cash. The floor safe fills up every two hours or so. I have to bring the armored car in here six or seven times a day to take it to the bank."