The cost of fuel has skyrocketed nationwide, with many provinces in Canada reaching record high levels. And, with immense uncertainty surrounding geopolitical tensions there’s no end in sight, experts warn.
“It does look like the pain will get worse,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
As the price of crude oil has reached its highest level in seven years, and with conflict between Ukraine and Russia at a spearhead, the average price at the pump has reached a national average of nearly $1.55 per litre, according to the Canadian Automobile Association.
So, why is the price of gas so high?
Despite Canadians in the country’s interior noticing lower prices than their coastal counterparts, the price of crude oil is currently trading for just over US$93 a barrel, Dr. Werner Antweiler, economics professor at the University of British Columbia’s Sauder’s School of Business, told Global News.
This is the highest it’s been since 2014, he noted.
With high demand and low supply, the concern of Russia, a major supplier of oil, curtailing shipments in response to imposed sanctions because of its ongoing clash with Ukraine, doesn’t make things any better.
“We’ve already seen Russia slow down nation gas supply to Europe as Germany has taken its time to approve the Nord Stream 2 pipeline, so the thinking is the Russia could also potentially weaponize oil,” De Haan said.
“If Russia were to abstain from invading Ukraine that certainly would help some of the pressure.”
When it comes to demonstrations and border closures brought on by trucker convoy protesters that the country has recently been dealing with, Antweiler doesn’t expect there to be a spillover impacting gasoline pricing as oil transportation typically doesn’t have to do with trucks.
Where are prices highest?
Newfoundland, British Columbia and Quebec currently have the highest prices across Canada, with prices in Vancouver reaching over $1.80 per litre on the weekend.
In the country’s capital, prices currently sit above the national average at $1.56 per litre. In Toronto, gas is currently $1.60 per litre.
Generally, prices in the territories reach higher levels because of transportation costs involved, Antweiler said.
In Yukon, Whitehorse’s cost of fuel currently sits at $1.68 per litre and in Yellowknife in the Northwest Territories, gas is now $1.60 per litre.
“They don’t have a direct source, they have to truck it in, and that actually adds to the cost of gasoline,” he said, noting taxation levels also have an impact provincially.
“What we see as a difference between different regions is often a source of local and taxation. No matter where you are in the country, you will face an increasing price of gasoline.”
When will prices go down?
There’s great uncertainty geopolitically, making it nearly impossible for experts to say for sure when prices will drop with all of the different factors at play.
“For now at least, it doesn’t seem like we’ll see any broad relief anytime soon,” said De Haan.
In fact, De Haan projects prices getting even higher as warmer weather approaches in some parts of the country.
“Springtime tends to see gasoline demand go up in Canada. We also transition to more expensive summer gasoline,” he said.
Although the market is currently “a free for all,” energy prices are generally cyclical, according to Al Salazar, vice president of intelligence at Enverus, an oil, gas and renewable investing analytics company, meaning things will have to drop eventually.
“If you look at history, this combination of inflation and high prices is never sustainable. Something has to give. Watch that cyclicality,” he said.
“I can’t emphasize enough that for those who are looking for a stable economic post-COVID recovery, high energy prices don’t support that.”
In regards to geopolitical tensions, if the situation escalates in Ukraine, experts say there are even higher prices to come.
“There might be some painful moments at the pump in the next couple of weeks depending what happens down in Russia,” said Salazar.
Moving west, if the United States can reach a settlement in their dispute with Iran, following former president Donald Trump’s initiatives to blow up the multinational deal to contact Iran’s nuclear program, there could also be hope for a price drop.
However, there is no timeline for sure as to when prices will really begin to fall.
“These are all very big ‘ifs.’ No one can really predict the certainty and say it’s going to go one way or the other,” said Antweiler.
How can you save money?
Canadians can start by filling up their vehicles at the beginning of the week for the best value, experts say, with Fridays typically being the most expensive.
Carpooling and using other modes of transportation will also help save some extra cash.
In the long run, however, driving a fuel efficient or electric vehicle will save the most, said Antweiler.
“Finding gas that’s going to save you a penny or two isn’t going to save you as much. What really matters is what kind of car you drive and that means a more fuel-efficient car — maybe one that’s hybrid or even better if it’s electric,” he said.
“Everyone who’s driving electric hasn’t been feeling the pinch at all.”
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