Fill up your gas tanks now, Ontario, because prices are going up

A gas pump is shown at a station in Montreal on April 12, 2017. THE CANADIAN PRESS/Graham Hughes

A gas price expert expects that the price at the pumps in Ontario has bottomed out.

Dan McTeague, president of Canadians for Affordable Energy, told Global News that after a three-cent increase Thursday morning, a five-cent increase is expected on Friday and further increases are expected over the next two weeks.

“I don’t think they’ll go any lower any time soon,” said McTeague, noting the cost to fill up in London, Ont., had been averaging at 65 cents a litre but is expected to climb to about 70 to 72 cents a litre over the next few days.

“Of course, in the evenings, gas stations love to shed their retail margins, which are about seven and a half cents a litre, six and a half cents a litre, so we often see prices move down.”

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McTeague adds that next week will be a turning point, as tax changes and the changing seasons begin to put pressure on the price at the pumps.

“The federal carbon tax, surprisingly, is going to be increased about 50 per cent, so about 2.5 cents a litre. The following week, we shift from winter to summer blends of gasoline, which cost most refineries about four or five cents a litre to produce because there is a material difference. This is a national regulation that’s been in place for some 20, 30 years,” he explained.

“That means sub 75, sub 80 cent a litre gasoline may start to slip away. Especially if, of course, there’s any potential light at the end of the tunnel here with this virus and its effects on demand here in Canada and abroad.”

Gas prices have plummeted in large part as a result of the novel coronavirus pandemic, which has resulted in a drop in global demand. The downward trend was exacerbated by both Russia and Saudi Arabia increasing production.

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“If we go into the all-clear period, which we all hope for, and the disease has finally run its course for now,” McTeague explained, “demand will be there and the supply may not. We may be looking at periods of time where prices rocket up, 10, 12 cents a litre in one fell swoop.”

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In London, Ont., the price at the pumps in recent weeks averaged 65 cents a litre for the first time since December 2003. The tumbling price is even starker when considering that since that time, there has been a roughly 10-cent increase on the price of gas due to an eight per cent retail sales tax applied to gasoline in 2010, making up for a 13 per cent HST combined with the 4.42 cents per litre plus HST carbon tax.

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