Motorists may have noticed a jump in price at the pumps this week across Saskatchewan.
Prices had been hovering in the 60 to 70 cent-per-litre range for about two weeks since oil values crashed in April. On Friday, though, prices rose to the high 70s and even into the 80s at some gas stations.
“We are seeing quite a jump in the last week and a half. Prices have shot up from 69 cents a litre and now we are closer to 86 cents a litre,” GasBuddy.com analyst Patrick De Haan said over the phone from Chicago on Friday.
“A lot of this happening as more provinces reopen. More states in the United States are reopening, and that’s contributing to gasoline demand, which is rebounding from the previous lows.”
Experts at GasBuddy.com said Organization of the Petroleum Exporting Countries (OPEC) cutting production has established a floor price for oil and should help stabilize the market.
“OPEC has cut oil production effective May 1st. That goes back to their agreement in April that they made and that has established a floor on prices and now the demand is also rebounding,” De Haan said.
“There’s a situation where supply now — because of OPEC’s production cut — is dropping and demand is rebounding and that’s pushed prices up for crude oil to about $25 a barrel. We’ve also made a delayed transition to summer gasoline, which is affecting the price of gasoline.
“But you combine all those higher oil prices, more gasoline demand and the transition to summer gasoline and that’s largely behind the increase in prices at gas bars in the last few days.”
The analyst said the rebound get prices back to around a dollar a litre in Saskatchewan this summer, about 30 cents cheaper than last season.
“I think, eventually, depending on how things look when we do rebound, we probably will see prices recapture a dollar per litre. But that still could be several weeks if not a month away or potentially longer,” De Haan said.
“A lot of where we go from here — in terms of how quickly prices do go back up — will be contingent on how quickly and how many people are taking back to the roads as we do recover. I think that prices will remain far lower than where they were last summer across Saskatchewan.”
“This summer, we may be closer to a dollar per litre and some of the lowest summer prices we’ve seen in years so long as demand does not suddenly magically return to its full pre-coronavirus levels.”
The lowest gas price in the province reported on the website, as of 4:30 p.m. on May 8, was McRae Farm Service in Holdfast, Sask., at 68.9 cents.