The average price of gasoline in Canada has dropped over the past month from 170.9 cents a liter to 142.1 cents a liter on average, according to GasBuddy, a technology company that tracks gasoline prices in the United States and Canada.
An energy analyst says markets are in “panic mode” due to a possible recession, geopolitics and the latest interest rate hike from the Bank of Canada. These factors have caused gas prices to drop recently across the country, but the relief is unlikely to last.
“In the last month alone, we’ve saved about 35 cents a gallon,” Dan McTeague, president of Canadians for Affordable Energy, told CTV News Toronto in an interview on Friday (link). “I would say that by the second or third week of January, I expect prices to go up an average of 15 to 20 cents.”
This weekend, consumers can expect lower pump prices in most provinces and territories, with British Columbia having the highest average of 159.7 cents a litre.
Drivers in Alberta and Ontario will benefit from average fares of approximately 130.0 cents. The average for Nova Scotia is 142.3 cents, for Saskatchewan about 144.4 cents, for the Northwest Territories about 145.9 cents, for Prince Edward Island 148.6 cents, and for Drivers of Quebec of 149.6 cents.
New Brunswick, Manitoba and Newfoundland see prices in the 150.0 cent range.
This comes after several months in which petrol prices have reached record levels for consumers. The country recorded the highest national average cost of gas on June 12 with a price of 210.8 cents, GasBuddy reports.
WHY PRICES ARE DROPPING THIS WEEKEND
“The markets are very nervous,” McTeague told CTV News Toronto in an interview on Friday.
McTeague says the panic is being driven by a potential recession, severe COVID-19 lockdowns in China and rising interest rates. Markets think these factors could contribute to a “significant global slowdown.”
“Of course, the supply and demand numbers paint a very different picture,” he said of the continued demand for gasoline despite high prices.
Over the past month, gasoline prices in Canada have fallen by about 30 cents, but McTeague says diesel has still remained high.
“Diesel hasn’t budged, it’s still in the $2 range,” he said. “It truly is the world’s workhorse of all fuels. The fact that it hasn’t decreased shows that supply is limited.”
McTeague predicts there will be a “bounce” in prices in early January.
“I don’t think we’re going to see lower prices, it’s probably the best there is,” he said. “(Gasoline prices) may drop a few more cents by Christmas for the first Christmas gif, but beyond that Scrooge is waiting for us in 2023.”
WHY GAS PRICES GO UP
Gasoline prices are known to fluctuate from day to day and in every region. Natural Resources Canada, a federal government agency that oversees the country’s natural resources, explains on its website that there are many factors to why gasoline prices fluctuate that are immediately apparent at the pump.
When a consumer pays for gasoline, there are four categories that he pays for, namely the cost of extracting crude oil from the ground, the cost of refining the oil into gasoline, and the cost of running the retail outlet, and taxes to governments, he says.
When there’s a disruption in the chain, such as world events, natural disasters or an increase in demand, prices will rise, he explains.
“Oil markets are extremely sensitive to these events and react quickly by raising or lowering prices if available supply increases or decreases,” the website states.
