Gas prices see long weekend drop in parts of Canada, but analysts say relief not likely to last
The Canada Day long weekend saw gas prices plummet in parts of the country, but the relief at the pumps may not stay for very long, analysts say.
According to GasWizard.ca, prices in the Greater Toronto Area and Ottawa fell by 11 cents a litre on Friday and dropped again by six cents on Saturday, settling in at 187.9 cents a litre.
Gas prices in Montreal also saw a six cent drop on Saturday after a four cent decline on Friday. In Vancouver, prices dropped seven cents on Friday and by another seven cents on Saturday. Winnipeg and Halifax also saw a three cent drop in gas prices on Canada Day while prices in those regions held steady on Saturday.
The decreases come after crude oil prices slid in June following the U.S. Federal Reserve's interest rate hikes, sparking fears of a recession.
"Panicking markets, I think, is probably the best way to describe it. A bit of overzealousness in terms of concerns about recession and demand destruction," GasWizard founder and president of Canadians for Affordable Energy Dan McTeague told CTVNews.ca in a telephone interview on Saturday.
In Ontario, which saw the most steepest declines in gas prices, the slump in oil prices coincided with the provincial government's temporary 5.7-cent per litre gas tax cut. Other provinces have already cut gas taxes, including Alberta and Newfoundland and Labrador.
Despite the tax cut, Roger McKnight, chief petroleum analyst at En-Pro International, says gas prices in Canada largely follow what's happening in the U.S., where there continues to be a large discrepancy between supply and demand.
"Prices in Canada aren't made in Canada. They really follow whatever happens to the wholesale price in the United States. And in that regard, we have a situation where the crude inventories are down 13 per cent versus the five-year average. Gasoline down eight and diesel down 20," he told CTV News Channel on Saturday.
While OPEC had pledged to boost output, the group has failed to meet its targets as Libya and Nigeria slowed production in June, Reuters reported. Earlier this week, French President Emmanuel Macron told U.S. President Joe Biden that Saudi Arabia and the U.A.E. were already producing at capacity.
"I think the reality is that we were still no better than we were months ago, which is that supply of fuel remains challenging and demand is not slacking," McTeague said.
Facing the pressure from voters ahead of the U.S. midterm elections this fall, Biden has been urging domestic oil companies to ramp up production, while putting pressure on Gulf countries to boost supply. The White House is also considering expanding offshore oil drilling in the Gulf of Mexico.
"[Biden's] scrambling to look for a secure supply or a steady supply of crude, and that's a long shot," McKnight said.
McKnight says he expects a five cent increase in gas prices by Monday and says it's unclear which direction prices are going to go this summer.
"It's very difficult to say," McKnight said. "There's 16 factors that go into the price of a litre of gasoline and if any one of those changes, that changes the whole picture"
But McTeague predicts gas prices are only going to go up from here over the next two months, saying the difference between supply and demand won’t resolve anytime soon.
"What we saw here last week was a bit of a head fake... and not a reflection of fundamentals," he said. "It's pretty clear that there will be much higher prices come July and into August.”
With files from Reuters.
Rising interest rates might be bad news for Canadians with mortgages, but it also means higher rates on savings vehicles such as guaranteed investment certificates (GICs), prompting renewed interest in the investments.
For millennial and gen Z Canadians, owning a home in this real estate market might seem like a pipe dream. In an exclusive column for CTVNews,ca personal finance contributor Christopher Liew offers some strategies to consider if you can’t afford the housing market yet.
Is Canada's 'historic' housing correction affecting your plans to buy or sell? CTVNews.ca wants to hear from you
Following a series of interest rate hikes, Canada's housing market is now facing a 'historic' correction. CTVNews.ca wants to hear from Canadians looking to buy or sell homes in a changing market landscape.
With inflation rising at its fastest pace in nearly 40 years, the cost of everything from food to gas has skyrocketed. Canadians across the country are feeling squeezed, but big families with multiple children are at times shouldering much of the higher costs — and changing demographics and consumer patterns have left some of them more exposed to inflation than in previous generations.
The Canadian Association for Retired Persons is raising alarms about the increase in old age security only being made eligible for those 75 and above.
The rising cost of living is exacerbating the challenge for many Canadians living on fixed disability income to pay for food and housing.
The savings accounts of Canadians have sprung a leak. As inflation tops eight per cent, anyone with money in the bank is seeing their savings drip away at the fastest rate on record because interest rates for savings accounts, still largely languishing at around one per cent, haven't kept up.
With inflation at a nearly 40-year high, Canadians are feeling the financial strain. In a six-part series this summer, people at different stages of their lives detail where they're being hit the hardest.