Pain at the pump as gas prices soar in parts of Canada
Published Tuesday, May 10, 2011 10:50PM EDT
Last Updated Saturday, May 19, 2012 4:43AM EDT
Drivers in some parts of Canada are paying more than ever to fill up their vehicles today, after a steep price hike overnight.
According to the price-tracking website GasBuddy.com, a litre of regular unleaded gasoline cost Ontario drivers in Kitchener, Hamilton and London approximately 5 cents more on Tuesday morning than it did the night before.
And the average price at pumps across the country's biggest city rose even higher, up more than six cents overnight to $1.39 per litre.
That new record price is up from the 96.3 cents per litre Toronto drivers were paying on this date last year, and also higher than the old record of $1.37 set in 2008 when oil was trading at $140 a barrel.
But the price for a barrel of crude oil was just $103 at the close of trading Monday, giving those drivers who didn't join the long lines at city gas stations ahead of the hike reason to wonder, what gives?
Prices at gas stations in other parts of the country were holding steady, according to GasBuddy.com.
Jason Toews, the website's co-founder, said drivers shouldn't look to their local gas station attendant for answers. He places the blame higher up the supply chain.
"They're jacking up the wholesale price of gasoline and the retailers have no choice but to raise their prices," Toews told CTV News Channel in an interview from Regina on Tuesday.
Looking at prices from coast-to-coast, the price-predicting website tomorrowsgaspricetoday.com calculates the average price per litre in Western Canada is $1.29, compared with $1.39 in the east.
Asked why he thinks the prices vary so wildly, Toews singled out Alberta and its lowest-in-Canada gasoline tax rates.
"As a result they have some of the cheapest prices," he said.
However, he said Alberta has yet to be hit by recent price increases, which may happen by next week.
Michael Ervin, a downstream petroleum consultant, said the high markup of gasoline at the refinery level is "the culprit."
There's "very high demand" for gasoline at the moment, he said, which is draining inventories across North America and boosting prices. But the high markup for gasoline should eventually attract new shipments from Europe, helping to reduce gas prices this summer, Ervin said.
According to tomorrowsgaspricetoday.com founder Dan McTeague, there are several factors at work. But none account for the extra 7 to 10 cents he says refineries are charging Canadians.
Prices at the pump on Tuesday were "unprecedented" considering that crude is trading below $100 a barrel, McTeague said.
"These prices would demonstrate that there's either a crisis in supply or serious manipulation of prices," he told CTV's Power Play.
"The actual demand, globally and in the United States and here in Canada -- although that's less clear -- is not very high," he said. "And supply has never been this high. So the reality is the prices are well beyond where they ought to be."
McTeague blamed investors in commodities markets, and particularly in derivatives products, for distorting prices.
"What has happened now is that supply and demand fundamentals have been thrown out the window," he said. "Economics 101 no longer exists -- and as a result prices are being skewed."
Carol Montreuil, vice president of the Canadian Petroleum Products Institute, said the cost of raw materials like crude oil is one of the main factors driving up the price that drivers pay at the pump.
Over the past six months, Montreuil said the price of crude has shot up by more than $30 and prices at gas stations across Canada have risen by 30 cents a litre.
On a province-by-province basis, GasBuddy.com found the price trend on the increase in Ontario, Saskatchewan and Newfoundland, and down in British Columbia, Quebec and the Northwest Territories. Elsewhere it was steady.
Drivers everywhere may be fuming over the rising cost of filling up, but McTeague warns the effects extend far beyond consumers' wallets.
Statistics Canada's recent announcement that inflation is at its highest rate since before the recession -- largely driven by fuel and food prices -- is expected to spur an interest rate hike.
In that event, McTeague expects further dislocation of manufacturing in eastern Canada.
Meanwhile, it appears drivers across the country are coming to terms with the inevitably rising cost of a full tank of gas.
A Scotia Economics report released Tuesday found that, while vehicles sales are at their highest levels since 2008 in the resource-rich western provinces, compact cars and CUVs are finding favour among new vehicle buyers countrywide.
Sales of more fuel-efficient models jumped 23 per cent year over-year in April, the report concludes, calling the shift "a sharp reversal" from the recent popularity of pickups and minivans.
But if you've got a vehicle already and have no choice but to drive, Toews offers a number of tips.
Fill up early in the week, he said, as gasoline prices tend to rise in time for the weekend.
"Don't drive fast," he added, "Try to drive in a nice smooth manner and you'll save a lot of money just by changing your driving habits."
According to McTeague's price-predicting website, Tuesday's average price-per-litre in major centres across Canada was expected to be (rounded to the nearest cent):
- Calgary - $1.22
- Toronto - $1.40
- Montreal - $1.45
- Ottawa - $1.33
- Vancouver - $1.44
- Winnipeg - $1.23
But according to gasbuddy.com, as of mid-morning Tuesday, the average reported price was:
- Calgary - $1.21
- Edmonton - $1.19
- Halifax - $1.37
- Montreal - $1.39
- Ottawa - $1.33
- Saskatoon - $1.32
- Toronto - $1.39
- Vancouver - $1.38
- Winnipeg - $1.22
Toronto - $1.39
Victoria - $1.32
With files from The Canadian Press