U.S. motorists have seen the average price of gasoline plunge 14 cents over the past two weeks, to $1.91 a gallon, or their the lowest mark in seven years, according to analysts. Canadian drivers haven’t seen nearly as deep of a drop.
Pump prices are down 3.1 cents, to 93.7 cents a litre, according to Natural Resources Canada. That puts the average retail gas price actually higher than year-ago levels (see chart).
That’s a decline of 6.8 per cent in U.S. prices versus 3.2 per cent in Canada on a percentage basis.
To be sure, in some places, like Edmonton and other cities in Western Canada, gas prices are reflecting oil’s fall more evidently. But in other areas average prices aren’t budging much despite even lower crude prices.
“The loonie has a lot to do with it,” Roger McKnight, an energy industry expert at En-Pro International said.
A sharp retreat in the value of the dollar means refiners are paying more for oil they turn into gasoline, McKnight said, a cost they’re flowing on to consumers.
Compensating
Big oil firms are also “suffering” from the loss of revenue because of lower oil prices, McKnight said, and it seems the Canadian consumer is paying for it.
Major oil firms that do it all — from extracting oil to refining it to selling through their retail networks — are partially offsetting the hit they’re taking from rock-bottom oil prices by charging more at the pump than they might otherwise.
“That’s been reflected at the pump – you’ve seen crude dropping but the price of gas not dropping as much. The consumer at the pump is really subsidizing the financial stability of the upstream of the integrated oil companies.”
Suncor, Imperial Oil and Shell are the biggest integrated energy producers in the country. Suncor supplies retail stations under the Petro-Canada banner, while Imperial Oil’s retail network operates under the Esso brand.
MORE: Latest coverage — the plunging loonie
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