Gas prices in Canada are approaching record highs and could remain there through much for the summer.
With oil prices climbing, drivers from coast to coast are likely in for the priciest driving season in four years, according to analysts.
The national average gas price is currently hovering around $1.34 a litre, up from around $1.09 a litre this time last year, said Dan McTeague, senior petroleum analyst at GasBuddy. And there are few signs that the pain at the pump will ease off as the spring turns into summer.
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Gas prices in Canada jump by between five and seven cents a litre on average at the end of May. It’s unclear whether the same will happen this year, given that prices are already 25 cents a litre above last year’s levels.
For Canadian motorists, this means spending potentially hundreds of dollars more at the pump or revising travel plans to stay closer to home.
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According to calculations by Global News, a driver logging 6,500 km this summer would spend $113 more in the average compact car, $186 more in a typical SUV and nearly $200 more at the wheel of a gas-fuelled pickup truck.
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Drivers of SUVs and pickup trucks, in particular, could easily spend around $1,000 in gas this summer, the numbers show.
Soaring crude prices are driving up gasoline prices across North America.
Brent crude, the world benchmark for oil prices, briefly touched US$79 a barrel on Tuesday, the highest since November 2014 and up from just over US$50 a barrel this time last year. The North American benchmark, West Texas Intermediate (WTI), meanwhile, is trading at US$71 a barrel, up from less than US$50 a year ago.
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Experts point to several reasons for the hike. Saudi Arabia, the leader of the Organization of the Petroleum Exporting Countries (OPEC), for example, is aiming for a price of US$80 a barrel in order to finance a slew of ambitious — and expensive — social policies. And, generally speaking, OPEC has shelved the idea of flooding global markets with oil in an attempt to drive U.S. shale oil producers out of business.
U.S. President Donald Trump’s decision to reimpose sanctions on Iran is widely expected to give prices another boost by taking 800,000 barrels of Iranian oil off the market.
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And, in Canada, it doesn’t help that high crude prices aren’t lifting the loonie as much as they used to. Although the Canadian dollar has regained a bit of ground in recent weeks, it isn’t getting as much of a boost as it once did from good news in the energy markets, according to McTeague. Because oil is traded in U.S. dollars, a weaker exchange rate means Canadians pay more at the pump.