Good news for Metro Vancouver drivers frustrated by pain at the pump. Gas prices are forecast to fall in the next few days, and could fall even further as the summer approaches.
Petroleum industry analyst Dan McTeague, president of Canadians for Affordable Energy, told Global News that prices seen earlier this week, up to $2.20.9 appear to be the “high water mark.”
McTeague forecast the price per litre for regular gasoline could fall to $2.10.9 by Thursday followed by another three cents on Friday and potentially lower on the weekend.
Volatility on the markets, including the potential for U.S. interest rate hikes, coupled with increasing production at refineries in Washington state are the key drivers of the short-term price drop, according to McTeague.
But longer-term savings could also be in the offing, as the Trans Mountain pipeline expansion comes fully online, said University of Calgary economics professor Kent Fellow.
“I would expect the prices to drop anywhere from 10 and 25 cents, but with a pretty wide error bar on that because we don’t know quite where things are going to settle,” Fellow said.
Fellow said that up until 2015, fuel prices in the Lower Mainland and Edmonton tended to track together, but rule changes and constrained volume on the Trans Mountain pipeline essentially halted it as an avenue of delivery for gasoline and diesel.
That meant B.C. buying more refined fuel that was either shipped by rail or from the United States, resulting in higher prices.
“With Trans Mountain being completed, we are going to see an increase in tolls on that pipeline, they are going to jump a little bit, but I think there is a lot of economic logic to the theory that the relaxation of the constraint … is actually going to lead to lower costs,” he said.
“Maybe not pre-2015 costs, but I would expect to see the prices in Vancouver a lot closer to the prices in, say, Edmonton.”
Fellow said he expected those effects to be felt by late spring or early summer.
McTeague added that the cost of importing U.S. fuel could also fall in the long term, as the increased export of Canadian oil at a higher price through the Trans Mountain pipeline boosts the value of the Canadian dollar.
Wednesday marked the first official operational day for the controversial $34-billion pipeline expansion.
The expansion took four years to complete and the intervention of the federal government, which ultimately bought the project that has become one of the costliest infrastructure projects in Canadian history.