The cost to fill up your gas tank has gone up dramatically lately, but Albertans will likely just have to get used to the higher prices.
According to one expert, gas stations are trying to recoup losses while the oil market holds out on supply to capitalize on demand.
On Tuesday, most gas stations in Edmonton were charging 131.9 cents a litre to fill up.
Petroleum analyst Dan McTeague believes gas stations are charging more at the pumps to make up for losses as everything opens back up.
“Over the past year, many gas stations in lockdown have not seen the kind of activity that allows them the financial flexibility to offer gasoline at or near a loss,” he said. “There is a run up in crude prices. There is a run up in gasoline prices. Demand is also on the rise. This may also be a defence move by many gas stations to make sure that they’re not caught short.
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“No one’s buying the coffee, the beef jerky or whatever it is that they’re selling inside many of those convenience stores.
“Surviving gas stations are finally saying, ‘We can’t make a go of it at six cents a litre.'”
McTeague said a historically high retail margin of 16 cents a litre in Alberta is one thing to blame for high prices.
“It’s costing them about a buck-fifteen at the most in Edmonton to buy their fuel, (and) $1.17, $1.18 in Calgary, so the difference is the retail margin,” he said.
“The retail margins had increased dramatically about two weeks ago, so I think it’s here for the foreseeable future.”
The cost to fill up right now is drying up Edmonton Uber driver John Belanger’s profits.
“I’d love to make up for my losses over the last year,” Belanger said.
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“Then maybe what I should do is when people get in my car (Uber) I should say, ‘There’s surcharge on top of that — give me $10,’ cause that’s what they’re doing. Everybody had to go through it.”
Energy experts also credit volatility in the oil market for the rise in fuel prices, with greater demand and less supply for oil. They expect it to keep forcing gas prices up, with the potential to pay $1.40 a litre for gasoline right across Alberta this summer.
According to Richard Masson, executive fellow at the University of Calgary’s School of Public Policy, OPEC is holding back production to make up for losses after a tough few months in the industry. With more demand for gas and diesel fuel as the world reopens, they can charge more.
On Tuesday, crude oil was down 27 cents and closed at US$72.85 per barrel, but energy experts say usually high oil prices are good for Alberta and could lead to more jobs, investment and royalties.