Residents in the Greater Toronto Area (GTA), already experiencing sticker shock at the gas pumps, should brace for even higher prices in the coming days.
That’s according to Dan McTeague, president of Canadians for Affordable Energy.
He told Global News that by next week, he expects gas prices in the GTA will hit between $1.63 to $1.65.
McTeague said the price surge is happening because of a “disconnect between demand and supply.”
“Demand is surging, as was expected post COVID,” he said. “In fact, this is demand that we saw rising well before Omicron made its presence felt, back in the last week of November.”
McTeague said that’s when we should have seen higher prices.
“That sort of really just delayed the inevitable,” he said. “And now what we’re seeing is a massive disconnect between a shortage of supply and surging demand between the two.”
He said oil has risen from $75 a barrel on Jan. 1 to $93-94 a barrel in mid-February.
McTeague said that will likely rise to $100 a barrel “anytime soon.”
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“So some of this, of course, is simple fundamentals,” he said. “But the rest of it is not as clear, including weakness in the Canadian dollar. Why is it not responding to higher oil prices as it has in the past? We’ve obviously, as a country, lost our status as a petrodollar, but it’s more than that.”
McTeague said because the Canadian dollar is “weak” the country is losing about 14 to 15 cents a litre in purchasing power.
“In other words, the last time we saw $90 oil, the Canadian dollar was within three, four or five per cent of the U.S. dollar,” he said. “That’s critical for people to understand because it doesn’t just add, you know, higher costs to energy. It’s also cascading throughout the rest of the economy, causing higher prices for just about everything, including food.”
But, McTeague said “supply is really the issue here.”
The Organization of the Petroleum Exporting Countries (OPEC) had been saying that it “increased oil production by 400,000 barrels a day, per month for the past three months.”
“It turns out that that was not the case,” he said. “They simply don’t have spare capacity.”
What’s more, McTeague said with less investment in fossil fuels, “no one can meet the surging demand.”
As a result, gas prices are rising to “intolerable levels” that are “undermining and eroding affordability for pretty much everybody.”
He said the impact is not only being felt in Canada, but also around the world.
“And that doesn’t take into account any political fallout or geopolitical pressure from what happens between Russia and Ukraine, some suggest as early as this week, in which case all bets are off,” he said. “Fuel prices will surge, as we go to $120- $150 oil.”
McTeague said there may be a “bit of a lull here and there … but generally speaking, we’re going to be looking at another 10 to 15 cents a litre added on to the price of fuel. And not just gasoline, but obviously diesel as these prices rise.”
For those needing to fill up, McTeague shared a few tips.
First, he said people should only “buy what they need.”
“Buy on weekends,” he continued. “I find it sometimes better.”
He said buying gas in the evenings can also be cheaper.
“Sometime gas retailers will chop the price three or four cents a litre.”
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