No relief in gas prices as reliance on imports remains: analyst

With the price of crude oil still well below $60 a barrel, Canadian motorists continue to pay retail gasoline prices that has many oil and gas industry analysts scratching their heads in amazement.

The GasBuddy.com monitor had the Canadian average price at the end of last week at a 118.7 cents a litre.
Meantime, the American Automobile Association had the U.S. average at $2.77 an American gallon — or 73.1 cents a litre.

That’s a 45-cent differential and it moves to 55 when the American average is compared to the common price in Fort St. John.

For an explanation we went again to Gas Buddy senior analyst, Dan McTeague.

“We know for a fact the United States, as far as production is concerned, had a bad couple of months leading into their long weekend,” McTeague said.

“We also know that the demand picture in the U.S. is skyrocketing. The last observance by the energy information agency showed the demand year over year (is) at least seven per cent. That’s the highest increase we’ve seen since 2007. Whether it’s the function of the U.S. economy getting back on its feet, Americans taking advantage of cheaper fuel prices… either way, it means that there continues to be a fundamental problem of short supply, higher demand, equaling higher prices.

McTeague continued: “Of course, as Canadians, we did content ourselves for years saying we could continue to optimize our refineries, shut down one here, shut one down there, safe in the knowledge that we could meet demand some other way by importing, especially from the US.

“Well, now that has a huge cost, not only in terms of the Americans saying, ‘Hey, we don’t have enough for ourselves,’ (but) our Canadian dollar, which has lost the equivalent of 12 cents in value since last year per litre, really has an impact.

“When we had that to the taxes, it’s a quadruple whammy,” McTeague said.

Prior to his policy and public relations advisory work, Mr. McTeague had a distinguished 18-year career as an outspoken Ontario Liberal Member of Parliament beginning in 1993 and extending over two decades to 2011.

That noted, we asked how he viewed — in terms of gasoline pricing — a voter shift this fall, from what is generally tabbed the energy industry friendly Conservative government.

“If you get a New Democrat or Liberal government, look for a four cent increase no matter what,” McTeague said.
“They’re not going to change the distortions we see. Although it’s a great, wonderful thing to put a tax on carbon, which both the NDP and the Liberals, and I suspect the Greens as well, are in favour of, and with the oil companies now saying they like the idea, they know that motorists, consumers are ultimately going to pay for this.

“So, if we’re on board, and either of those parties prevail, expect prices to increase,” he said.

Meantime, speaking of the distortions we now see, at the end of last week, the common price in Dawson Creek was 14 cents a litre a less than the one in Fort St. John, at a 114.9 cents, and believe it or not, the low end price in Alberta, was a dollar more, than the high end price in BC.

We’re talking 60 cents a litre at the Gas N Go station at Namao, north of Edmonton –and a 159.9 cents a litre at the Driftwood Auto and Marine Centre on Pender Island, in Georgia Straight.

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