TORONTO -- Since dropping to multiyear lows last spring, gasoline prices have been on the rise, eclipsing pre-pandemic levels. With the summer driving season approaching and the economy set to reopen, the temporary break from pricey gas is likely over, says one analyst.
Gas prices eased slightly over the past week due to concerns about rising COVID-19 cases in Europe. But that move follows a gain of about 20 per cent since the beginning of 2021, and nearly 60 per cent since last April, according to price tracking by GasBuddy. The average price across Canada was about $1.24 per litre on Monday.
“I think that the downturn that we're seeing here in the last few days is temporary and we could eventually see prices in Canada potentially eclipse some of the higher levels we've seen in recent years,” Patrick De Haan, head of petroleum analysis for GasBuddy told CTVnews.ca in an interview.
Gas prices vary by province and region, with taxes and delivery costs typically accounting for much of the discrepancy. However, prices have been rising across Canada.
De Haan said higher prices were due mostly to the surging price of crude oil, which has been driven by expectations of higher demand as economies reopen and tight supply due to production cuts made last year.
“Motorists are getting out and about not only in Canada but the U.S. as well we're starting to see more flights added on a daily basis as we start to see some return to normalcy,” said de Haan.
Several oil-producing nations, including the OPEC group, slashed production last April and have continued to keep it low despite the recent strength in crude prices. WTI crude oil has risen more than 25 per cent so far in 2021 and was trading at US$61.20 on Monday, according to oilprice.com.
Also contributing to the supply constraints were the refinery shutdowns in Texas due to extreme cold weather in February. Those shutdowns alone have likely added seven to 10 cents per litre to gas prices in Canada, said De Haan.
Gas prices heading into summer typically get a boost due to increased driving as Canadians travel more, as well as a pricier warm weather blend of gasoline that refiners switch to ahead of the summer. Those factors, combined with the supply situation, could continue to push prices higher over the coming weeks, said De Haan.
“Demand is going up, supply has not yet followed,” he said. “If OPEC raises production, that would keep prices from escalating significantly. But if they do not we could be talking about Canada prices this summer over $1.30 or $1.35 per liter.”
