Kingston, Ont. drivers feeling the price pinch at the gas pumps

Gas prices, allowing for day-to-day variances, are inching their way very closely to $1.60 for a litre of regular gasoline.

Prices in Kingston, Ont., were just under $1.57 on Feb. 10.

Trisha Bauder says she’s lucky, since both her job and her daughter’s daycare are within walking distance.

Even so, Bauder says if current prices continue it could cost her an extra $40 a month.

“My car I used to fill up on $40 every two weeks and now every two weeks I’m filling up on $60,” said Bauder.

Taxi driver Ron Hare says the higher gas prices are hurting his bottom line.

“It bites into our profit if you will,” said Hare. “We get paid a percentage of what the taxi makes and therefore I have to deduct that (the increase in fuel) off whatever it makes, so it’s my total income at the end of the day so it does have a great impact on it.”

David Detomasi, a professor at Queen’s University’s Smith School of business, says there are three main factors leading to the rise in the price of gas.

“Supply and demand, geopolitical problems and weather-related stuff,” said Detomasi.

Winter usually has an impact on gas prices, according to Detomasi.

“It’s tough to move the gas and move things around, and people consume more gas if they’re heating, so demand is up and that’s true globally,” said Detomasi.

When it comes to geopolitics, Detomasi says the current friction between Russia and Ukraine is also having an impact.

“Russia … is one of the world’s biggest exporters of natural gas and a lot of it goes through Ukraine to Western Europe,” said Detomasi. “So people are pricing in geopolitical risk that is driving the fundamental price of gas up.”

Lower demand for gas early in the pandemic, with large sections of the global economy shut down for periods of time, led to lower oil production and refining.

However, economies are opening up and pandemic restrictions are loosening, leading to an increase in the demand for gasoline.

“The real question is whether or not oil and gas companies will continue to invest the amount they need to meet the very real demands that we have. We’re really in a big transition problem right now.”  said Detomasi.

One of the reasons for that investment hesitancy, according to Detomasi, is environmental concern.

“A lot of folks are reluctant to provide funding to oil and gas companies because they want us to environmentally transition. That’s coming home to roost; there is a supply crunch in the system based on that lack of investment,” said Detomasi.

Detomasi says he expects gas prices to moderate somewhat, but a significant drop in prices might not occur until the summer or for as long as six months while some of the existing pressures are resolved.