TORONTO – Consumers may be frustrated when filling up their cars these days. The price of gasoline has been creeping up, despite fact the world price of crude oil has hit a six year low.
“We have an oversupply of oil and an undersupply of gasoline,” said Marvin Ryder, a professor at McMaster University’s DeGroote School of Business in Hamilton.
Ryder points to U.S. refineries performing annual maintenance and switching production from winter gasoline to summer fuels. As a result, he says, refining capacity is significant reduced.
The declining value of the Canadian dollar plays a role too.
“The Canadian dollar is actually going down, and crude oil prices are always quoted in US dollars,” said Steve Bang, a business professor at Humber College.
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“So as our dollar slips against the U.S. dollar, what will happen is that the actual price of gas will go up because of that.”
In September 2014, regular gasoline in the Greater Toronto Area (GTA) was selling for an average of $1.30 per litre. At the time, crude oil was selling for about $102.
By January, the price of fuel fell to $0.91 a litre, and crude had fallen to about $57 a barrel.
Now, although crude oil was selling for about $57 a barrel, gasoline in Toronto had risen to $1.03 on average.
“I think the (oil and) gas companies are making money for sure, there’s no doubt about it,” said Bang, who says the lack of competition among a few major companies gives consumers few choices when shopping for fuel.
Marvin Ryder agrees that oil companies are taking advantage of discounted crude prices to add to their bottom line. But he estimates the increased profit is only about one cent per litre.
Ryder says he believes that if crude prices remain low, consumers may get a payoff in time for summer driving. Ryder says he believes gasoline prices in the Toronto area may dip to as little as 85 cents a litre again within a few weeks.
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