Gas prices are expected to drop six cents a litre across most of Ontario going into the Thanksgiving weekend and there could be further decreases due to a “market in panic,” according to an industry expert.
Dan McTeague, president of Canadians for Affordable Energy, is predicting that the bulk of southern Ontario, including Toronto, Ottawa, Hamilton, London and Barrie, will see the dip due to “nervous economic headwinds” and the general threat of higher interest rates.
Prices are likely to drop from an average of $1.559 per litre to $1.499 per litre, according to McTeague.
“If anyone had any doubt as to the effect of high-interest rates, well, they’re now starting to be borne on the economy, where people are starting to make very different, very tough choices as to how they’re going to allocate their precious dollars,” he said.
Last week, McTeague predicted prices would stay high for some time due to a major regulatory change in California that partially shut down and put some refineries into maintenance.
However, energy markets appear to be plummeting on worries of a possible recession and even higher interest rates in the United States.
He said prices could even fall another $0.02 a litre to $1.479 per litre on Saturday, the lowest price in Ontario since last March.
Prices in the past month have gone down as much as 26 cents a litre in Ontario from an average of $1.769, and that momentum has been seen right across North America, including Canada’s west coast, where residents in Vancouver have had prices in the $1.75 per litre range compared with the $2.15 most were paying a week and a half ago.
But McTeague suggested the subtext behind the drops “isn’t as delightful” due to supply shortages not just of oil but diesel in particular, which he estimates is probably 10 to 15 per cent below the five-year or 10-year average.
“Diesel is a proxy for the health of the economy, and it’s been on a tear,” he said.
“Demand has been very strong … so if you start dropping the price, even though demand is strong, you wind up dwindling supply in a pretty significant way.”
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