Gas prices surge in Metro Vancouver as Iran conflict fuels global uncertainty

The conflict thousands of kilometres away in Iran is having a ripple effect around the world, including here in Metro Vancouver.

Gas prices across Metro Vancouver have climbed past $2 a litre for the first time in nearly two years, a spike analysts say is being driven by global uncertainty tied to the conflict in Iran.

Energy analysts point to the closure of the Strait of Hormuz, a key shipping route that typically handles about 20 per cent of the world’s oil supply, as a major source of pressure on global oil markets.

“Any time that you have a hiccup in supply, especially one as serious as we have been seeing now for going on three weeks, you start to create problems in the overall global supply,” said Matt McClain, a petroleum analyst with GasBuddy.

While British Columbia does not source its fuel from the Middle East, analysts say oil is priced on a global market, meaning disruptions abroad can still drive prices higher locally.

Small businesses impacted

The surge in fuel prices is already translating into higher costs for some Metro Vancouver businesses.

Viktor Mruchkovskyi owns Full Basket Butcher in New Westminster and says farmers have begun warning him that delivery costs are set to increase.

“A lot of farmers are actually sending the emails to us and sending the letters that they are increasing the prices for the delivery,” he said, adding the new costs come on top of a five to seven per cent increase in meat prices in recent weeks.

Mruchkovskyi says he has not raised prices yet, but admits if costs remain high, he may be forced to.

“Otherwise, it will put us out of business. And we’ve been on the market for almost five years, and no other choice,” he said.

Housing impacts

The rise in fuel prices is also raising concerns about inflation and interest rates.

Brendon Ogmundson, chief economist with the B.C. Real Estate Association, says economic indicators had been pointing toward relief before the recent spike.

“We were expecting maybe mortgage rates would come down a little bit more. Maybe the Bank of Canada might be cutting rates. Inflation is getting a little softer and the economy’s been kind of weak,” Ogmundson said.

“And now, instead what we’re seeing is interest rates that tend to drive mortgage rates are starting to actually rise significantly over the past couple of weeks.”

Analysts warn higher fuel prices could continue to push up everyday costs and say prices at the pump may keep climbing, depending on how the conflict in Iran unfolds.