Gas prices are coming down in Canada, but experts warn it may not last

After a difficult month at the pumps, Canadians saw gas prices come down slightly on Friday, but experts warn that the downward trend may not last.

Average gas prices in Canada were at $1.78 per litre on Friday, down from $1.81 on Thursday, according to CAA. GasBuddy put the average price at $1.80 on Friday, down two cents a litre compared to Thursday.

However, prices still remain much higher compared to this time last year ($1.29) and even a month ago ($1.53), according to CAA.

Some gas stations in Toronto saw prices drop by as much as four cents, said Patrick De Haan, head of petroleum analysis at GasBuddy.

“The drop in prices that we’re seeing right now has to do with the big drop that we saw on Wednesday and the price of oil after a ceasefire was announced and Iran had said it would reopen the Strait of Hormuz,” De Haan said.

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On Wednesday morning, the price of Brent crude — the international benchmark for the price of oil —plummeted from around $110 a barrel to around $92 a barrel. That is having a delayed effect on gasoline prices in Canada and the U.S., De Haan said.

“That 15 per cent drop in the price of oil is now translating to a fall in gas prices across much of Canada,” he said.

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But commuters shouldn’t rest easy just yet, said Clay Jarvis, NerdWallet Canada’s financial expert.

“With a war as unpredictable as this one, there’s no way to know where gas prices are heading. Even if prices slide over the next several days, it would only take a few bombs aimed at Iranian or Kuwaiti oil infrastructure to send them back up,” Jarvis said.

On Wednesday, a day after the ceasefire was announced, Iran closed the Strait of Hormuz over Israel’s attacks against Lebanon.

Even if the Strait were to reopen, it would be a while before it translates to lower prices for Canadians, Jarvis said.

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“There’s still a massive backlog of ships that need to get through the Strait of Hormuz before global oil supply, and oil prices, stabilize,” he added.

Canadians can expect lower prices to continue through the weekend, De Haan said. But anything beyond that will depend on what happens 10,000 kilometres away in Islamabad on Saturday.

U.S. and Iranian delegations will meet in the Pakistani capital Saturday to try to negotiate an end to the war.

“We may see a slight dip in prices (over the weekend). But before I say the coast is clear, the U.S. and Iran are holding talks on the ceasefire this weekend in Pakistan. What develops there could be influential in directing oil prices up or down early next week,” he added.

Depending on the outcome of Saturday’s talks, gas prices in Canada could swing anywhere between $1.50 and $2.50 per litre, De Haan said.

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While gasoline prices came down slightly, diesel hit a record high.

Diesel prices nationwide were at $2.27 a litre, according to GasBuddy, marking an all-time high, De Haan said.

The previous high was $2.25 on June 19, 2022.

Higher diesel prices could translate to higher prices for goods, including “groceries or anything that travels via a plane or a train or a truck,” De Haan said.

Canadians could also be paying more for their airline tickets with jet fuel getting costlier, he said.

“With refineries in areas like India and China slowing down because of a lack of oil, it’s heavily impacted jet fuel availability. Jet fuel prices have been white-hot in recent weeks. That could lead to a continued rise in airline airfares,” De Haan said.