Fill up now, analyst says, as gas prices are likely to jump soon in Saskatchewan

It’s a present on everyone’s Christmas list this year and Santa is delivering.

Gas prices in Saskatchewan were at their lowest since early 2022 on Thursday, offering consumers some much-needed relief from the decades-high inflation they’ve been faced with all year.

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Regina’s lowest-priced gas could be found at 130.9 cents a litre. And in Saskatoon, armed with a Costco membership, one could find a litre for under $1.30.

But one energy market analyst says this is one gift that won’t keep on giving.

“What we’re seeing today, I think it’s a bit of a head-fake. These prices are much lower than they should be considering fundamentals,” said Canadians for Affordable Energy president Dan McTeague.

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“And we are likely to see prices go right back up in January, but really accelerate as we head into the summer driving season.”

According to McTeague, Canadians have seen a drop of roughly 35 cents per litre in the past month on average.

That’s a drop he attributes to recession fears and cooling energy markets. But he believes the relief will be short-lived.

“Much of that is due to panicked, perhaps oversold energy markets — traders who are not really physically involved with the actual delivery and production of energy products but in fact are money managers, hedgers, day traders following algorithms on their computers,” McTeague said.

“That’s what’s driven these prices down but it completely ignores the fundamentals in that we have tight supply of oil. We have tight supply, not just in North America but globally, of diesel in particular, and heating oil and other products, and to a lesser extent even gasoline.”

McTeague said he believes consumers in Saskatchewan could see a jump of 10 cents a litre by the end of January, and a continuing rise from there.

“There has been no demand destruction to the extent that it’s been discussed,” he said.

“What we are seeing, in fact, is very strong, robust demand and that’s going to take us into 2023. Take advantage of this Christmas gift.”

How high does McTeague think prices will go next year?

Highlighting an increase in the gasoline carbon tax from 11.1 to 14.3 cents a litre coming April 1, he says we may see prices as high or higher than they have been when they peaked in 2022.

“We got awfully close to $2 a litre. Short of governments backing off, that number will inevitably be touched again, perhaps even surpassed.”