Oil hovering around $100 with impacts being felt by consumers

Inflation is on the rise for nearly everything as the cost of oil soars amid the war in Iran. Experts say consumers can expect to pay more for food and flights.

As oil prices surge amid ongoing war in Iran, experts say Canadians should brace for rising prices on everything from groceries to airline travel.

West Texas Intermediate crude oil surpassed $100 over the weekend before dipping to $90 Monday afternoon.

“If we look back to the big Middle Eastern shocks we had in the 1970s with the oil crisis, the 1991 Iraq War, the 2003 Iraq War, the Arab Spring, (it’s clear) we typically get a big run up in prices,” said RJ Johnston, director of energy and natural resources policy at the University of Calgary.

Johnston said there should be an eventual correction to gas prices, but that usually only happens when “there’s some kind of sense what the geopolitical end game is.”

Meanwhile, the surge in oil prices is being felt by those in the transportation industry.

John Mutumba works as truck driver on a route from Brampton, Ont., down through Illinois before delivering corrosive materials to Grand Prairie, Alta.

“Truckers … are very, very worried,” said Mutumba.

He says before he left for the United States on Sunday, diesel was $3 per gallon. By the time he left Illinois, it had already shot up.

“Cheapest was $4.05,” said Mutumba.

Experts also say the increased gas prices will eventually be felt by consumers at the grocery store.

According to Sylvain Charlebois, the director of Dalhousie University’s Agri-Food Analytics Lab, every 25 per cent of sustained increase in oil prices that lasts more than a month will add roughly $150 to $200 to the annual grocery bill for a family of four in Canada.

“You’re likely to see food prices skyrocket within the next three to six months,” said Charlebois.

Keith Willoughby, the dean at the University of Saskatchewan’s Edwards Business School, says fuel costs caused by the war in Iran will be passed down to consumers.

“(There will be) extra inflation when it comes to grocery prices,” said Willoughby.

“If this were to continue on for the next while, we’re going to see an ongoing impact in terms of some of the inflationary challenges that we’ve seen that have surfaced over the past number of years.”

John Gradek, the academic programs coordinator of integrated aviation management at McGill University, says passengers should be bracing to pay more for flights.

He estimates flights in North American and South American could rise 10 per cent while overseas flights could go up by 20 per cent with the oil WTI sitting at $100 a barrel.

“Double that if WTI goes to $150,” Gradek said.

He also pointed out some flights will have to add time with airspace disruptions in the Middle East adding more time and more fuel.

“A flight from Toronto to Mumbai will add two hours,” he said.