Canada's spurt in gas prices is caused by stock market speculators in gasoline futures creating unnecessary panic because of the unrest in Libya, experts say.

Canada imports no oil from Libya, so the speculators are fueling an artificial situation as the per barrel price of oil rises past US$110 on the world market, Liberal MP Dan McTeague said Wednesday.

He also predicted that gas prices may rise another 2 to 3 cents overnight because of the "overblown" response to the situation in Libya.

Libya is one of the world's largest oil producers and reports are being circulated that because of the uprising against his regime, Libyan dictator Moammar Gadhafi has ordered his forces to torch the oil fields rather than leave the rebels with a working oil industry.

"We are paying extra (for gas) today, because a grumpy dictator made some threats yesterday," McTeague told

David Detomasi, professor of International Business at Queen's University, agreed with McTeague's estimate that the response was overblown and caused partly by speculation.

Although Canada and the United States does not get any oil from Libya, the speculation is affecting the price of gas futures on the world's stock markets.

"There is some fear that what is going on in Libya will spill over to the rest of the Middle East," Detomasi told

"And there are people who are looking to make a profit."

Detomasi said he was surprised the reaction had not been as wild as it could have been.

"But in Canada, prices go up on long weekends."

Regulations governing speculations were not yet in place in the United Sates and Canada, but were being worked on, he said.

McTeague said even though there is nothing wrong with speculation, "this is an unbridled response to crisis.

"They are betting that the oil price will go up because of the situation in the Mideast."

The artificial situation and "overblown response" to the situation in the Middle East is possible because governments around the world are not governing the trading in commodities.

Lack of regulation and overblown speculation drives the prices up.

McTeague said an increase in gasoline futures could translate into a 2- to 3-cent-a-litre rise in prices at the pump.

When the prices of the futures soar even more, the gamblers will sell and make huge profits.

The stock market players are also betting that the uprisings that have flung out the rulers in Egypt and Tunisia before spreading to Bahrain and Libya, will spread into other oil-producing nations and drive the future prices per barrel ever higher.

However, Libya is the first major oil producer to see its production disrupted by unrest.

According to the International Energy Agency, Libya is the world's eighth-largest oil supplier in the Organization of Petroleum Exporting countries (OPEC) and has the largest crude oil reserves in Africa.

Libyan oil is of a very high quality and the country produces well in excess of one million barrels a day. In January, Libya exported 1.49 million barrels.

Most of Europe's oil supply comes out of Libya with that region receiving more that 85 per cent of Libya's exports.

Detomasi said according to 2008 figures, China imports 425,000 barrels of Libyan oil per day.

Libya also produces natural gas, which provides 45 per cent of the country's energy needs and is also exported by pipeline to Italy and shipped to Spain as liquid natural gas.