Gasoline prices across Canada shattered an all-time record high on Friday, as crude prices soared above US$90 per barrel and North American refineries worked full throttle to keep up with demand.
The national average retail fuel price sat at 151.6 cents per litre as of 1.p.m. ET Friday, according to fuel price tracking website GasBuddy.com.
That’s the highest average price on record, according to the website, which has data as far back as 2008.
It’s also 38 cents higher than the average price at the pumps last year, 11 cents higher than the average last month and almost four cents higher than the price of gas just last week.
The national average retail price for gasoline in Canada has risen steadily over the last month, after starting the new year around the 145 cents per litre mark.
For 2021, a new record high was set on Oct. 28, when the national average price hit 147.3, according to GasBuddy.com.
Vijay Muralidharan, Calgary-based director of consulting at Kalibrate, formerly Kent Group Ltd. — another organization that tracks fuel prices — confirmed that prices Friday have hit never-before-seen levels.
“Usually we would not see this at this time of year, but these are unprecedented times,” Muralidharan said.
The price drivers pay at the pump is based on four factors — crude prices, refinery margins, retail and marketing margins, and taxes.
Crude prices have soared to an eight-year high, as global economies ease public health restrictions related to the COVID-19 pandemic and travel demand and economic activity picks up. The benchmark West Texas Intermediate price topped US$92 per barrel on Friday morning, up more than six per cent from the week before and more than 60 per cent year-over-year.
But perhaps even more telling, Muralidharan said, is that North American refinery margins are also at all-time highs. He said that’s “astonishing” for this time of year.
“Usually refiners don’t have a big margin during these months,” he said. “It means that demand is so strong for gasoline and diesel right now that refineries are operating at high capacity for this time of year, compared to historical standards, and they have to charge higher margins to keep them going.”
Muralidharan pointed to the massive uptick in economic activity south of the border recently as a major factor behind surging gasoline demand. U.S. GDP growth hit 6.9 per cent in the fourth quarter of 2021, a massive jump from 2.3 per cent growth in the prior quarter.
Gasoline prices during the summer driving season typically soar much higher than what is seen in the winter months, but Muralidharan said that might not be true this year.
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to a small increase in production, and that will help ease pressure, Muralidaran said — though it will take a couple of months for the increased supply to build up enough to affect the market.
In addition, if central banks raise interest rates this year as anticipated, that will likely curb personal consumption and in turn, reduce demand for gasoline.
“Keep an eye on interest rates,” he said. “That’s a very critical joker in the bag.”
CIBC chief economist Avery Shenfeld said in a note Friday that tension between Russia and Ukraine is another factor that could moderate crude oil prices sooner rather than later.
However, Shenfeld pointed out that overall demand for gasoline is still being held back somewhat by the Omicron variant of COVID-19.
“Around the world, many are still working from home, and being a bit reticent about leisure travel using cars, planes and cruise ships,” Shenfeld said. “Although those with thin wallets will be forced to ease off the gas pedal, it’s hard to see total demand coming down much as Omicron fades out, assuming it’s not followed quickly by a troubling new variant.”
According to data from Natural Resources Canada, drivers in Newfoundland are paying the most for gasoline this week (Labrador City topped the list at 178.1 cents per litre), followed by drivers in British Columbia (gas in Vancouver averaged 176.8 cents per litre.)
The lowest prices for gasoline can be found in Saskatchewan, where gas in Prince Albert was 137.8 cents per litre this week, and Alberta, where the lowest price was found in Lloydminster at 135.3 cents per litre.