Gas prices in southern Ontario are set to rise to their highest level in months, a petroleum analyst tells Global News.
Dan McTeague, president of Canadians for Affordable Energy, said the average price for a litre of gas is set to rise eight cents overnight.
The current price for a litre of gas is around 156.9 cents, but by Wednesday, that’ll rise to 164.9 cents per litre, he said.
The last time gas prices were that high in southern Ontario was Nov. 15, McTeague added.
He said the cause of the jump is a switch over to summer gasoline.
“Semiannually we have a change in the blend of gasoline in Canada mandated by government,” he said.
“So this isn’t, you know, a quick move by whoever to make some money. From the 15th of April to roughly the 15th of September, you have to introduce gasoline that resists, to the extent that it can, evaporation. So it’s called summer blend gasoline.”
McTeague said that blend of gas requires different components that are more expensive to include.
He said the difference in price between winter and summer gas was about 11 cents per litre up until last week, but a change in energy markets caused the difference to drop to eight cents.
Looking further ahead, McTeague said residents can expect to be paying more at the pump.
“I think for the next week or so, you’re going to this bit of a tug of war between energy markets focusing perhaps too intently on headline economic news, potential for rate increases, slowing demand as a result of higher interest rates,” he said.
“But the fundamentals, that is supply and demand, point to a very different story,” McTeague continued. “A story in which oil is likely to move up at least ten bucks a barrel between now and May 2-4 weekend. And it would go even higher if the U.S. Fed makes a decision not to pursue or to proceed with further interest rate hikes. If it does that in May …we could see oil hit 100 bucks a barrel, which would push gasoline prices up about 20 cents a litre.”
That would mean gas prices would be around $1.85 or $1.90 per litre.
But McTeague said the “silver lining” is that he doesn’t expect prices to hit 215.9 cents per litre, which was seen in southern Ontario last year.
“We won’t see that,” he said.
“But what we will see is prices remaining higher and for the foreseeable future. They’re not going to come down all that much like they did from I would say last December really up until the third week of March. We got a heck of a break with nervous investors being distracted by headlines which have very little to do with fundamentals.”
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