2023-08-16 17:01:01
Canadians are already paying more at the pump over the past week, with prices soaring in some areas.
This text is a translation ofan article by CTV News.
According to data from the Canadian Automobile Association (CAA), the average price across the country on August 16 is 169.3 cents per litre. A week ago, the average price was 163.9 cents per litre.
GasBuddya gasoline price gauge, shows that British Columbia has the highest gasoline price at 192.8 cents per litre, followed by Nova Scotia at 186.3 cents per litre, and Prince Edward Island at 186 cents per litre.
The lowest gasoline prices as of August 16 according to GasBuddy are in Alberta with a price of 146.4 cents per litre, the Northwest Territories at 159.3 cents per liter and Saskatchewan at 161.3 cents per litre.
Gasoline prices have been rising for several months.
The July report on theStatistics Canada Consumer Price Index (CPI) attributed an increase in inflation primarily to gasoline. Headline inflation rose from 2.8% in June to 3.3% in July.
“Excluding gasoline, the CPI rose 4.1%, slightly above 4.0% in June,” said the CPI released on Tuesday.
Experts explain that there are several factors contributing to the rising cost of gasoline and that prices are likely to remain high.
Why are gas prices higher?
Michael Manjuris, professor and chair of global management studies at Metropolitan University of Toronto, told CTVNews.ca in an interview that bad weather and lack of supply are to blame.
One factor behind rising gasoline prices, according to Manjuris, is a recent move by the Organization of the Petroleum Exporting Countries (OPEC), which controls crude oil supplies for most of the world.
In June 2023, OPEC cut daily crude oil production by one million barrels per day. This reduction drives up costs and will continue to do so as this reduction is rolled out in other countries over the coming months.
“It’s a significant reduction in supply,” Mr. Manjuris said. “If there’s no change in global oil demand… Then that’s the basic economics: your supply goes down, your demand stays the same, and we start to see a second factor, causing an increase in gas prices at the pump.
– Michael Manjuris, Professor and Chair of Global Management Studies at Metropolitan University of Toronto
Storage of refined petroleum products is another concern, according to Manjuris.
“We don’t have a lot of excess capacity,” he said. “So anytime there is a major weather event that hits refining areas like Texas, California or us (Canada)…it’s a significant chunk of refining supply that’s taken out of the market.”
Climatic events such as forest fires, tornadoes and major storms can damage refineries that cannot be repaired quickly. Manjuris says when this happens, the plant can be out of service for months.
“There is a distribution center in Gretna, Manitoba, where we have a convergence of crude oil pipelines, and twice this summer they had to close that distribution center, only temporarily because the equipment mightn’t not work reliably,” Mr. Manjuris said.
During heat waves, the technology can malfunction and a reduction in capacity is needed or a complete shutdown, he said.
Predictions for the next few months
Mr. Manjuris says some weather factors, such as extreme heat, will not pose a problem in the coming months, however, gasoline prices will remain high.
“In late summer, early fall, every indication I see is that gas prices in southern Ontario in particular, but across Canada, are going to go up. »
– Michael Manjuris, Professor and Chair of Global Management Studies at Metropolitan University of Toronto
Michael Manjuris estimates that Canadians might expect to pay close to $2 a liter over the next few months.
High prices have been rising over the past six months, Conference Board of Canada chief economist Pedro Antunes told CTV News Channel on Tuesday.
“When we compare to June, we’re looking at very strong or very high levels that we saw a year ago or a year ago, but in the last six months gasoline prices have gone up,” said Mr. Antunes.
Barrels of oil fell from US$70 to US$80, he said.
“That will be reflected in gasoline prices going forward,” Antunes added.
Mr. Manjuris believes gas prices will continue to rise before falling.
“I personally predict something between $1.95 and $1.98, in southern Ontario, in the early fall, but I suspect it will go down once more in the winter following that,” he said. -he says.
A summer blend of petroleum costs more to manufacture than winter blends, which is one of the factors why gasoline prices typically drop as winter approaches.
As a result, Manjuris says there is still a price reduction of around eight to nine cents per litre.
With information from Tara De Boer of CTVNews
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