Fuel prices tend to ease off around this time of year, but one industry expert says drivers should expect no such relief this time.
“Traditionally, gas prices decline after Labour Day as gasoline demand slowly tapers off and we also in a week make the transition back to cheaper winter gasoline,” said Patrick De Haan, head of petroleum analysis at price-tracking website Gasbuddy.com.
“But we may not see much of that tailwind this year.”
Crude prices spiked when the U.S. and Israel launched their war against Iran in late February. Tanker shipments all but ceased through the Strait of Hormuz, a strategically vital link between the Persian Gulf and the open ocean. By early summer, prices retreated to close to pre-war levels amid hopes for peace, but the situation has since deteriorated.
Brent crude, the international standard, was hovering in the triple digits in Wednesday trading after attacks on oil facilities and ships in the Middle East threatened to further debilitate an already weakened supply chain. The last time prices were that high was in July.
“Brent breaking above $100 US is a major psychological milestone for markets, but the bigger concern is what this means for inflation,” Lukman Otunuga, market research head at global broker FXTM, said Wednesday.
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Ukrainian attacks on Russian refineries have further squeezed the market, De Haan added.
“At least for now, Canadian motorists across most provinces are going to have to dig deeper.”
Gasbuddy, which crowdsources pump price data from across the U.S. and Canada, pegs the national average for a litre of regular unleaded gasoline in Canada at just above $1.80, an almost four-cent jump from a day earlier.
“It likely could hit $1.82 to $1.85 here in the next week or two,” De Haan said.
Diesel prices, already touching record highs, could also climb an additional five to 10 cents a litre, he added.
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And that will filter through to consumers in a “furious fashion” in the weeks ahead, as trucks and railroads pass costs on, De Haan said. It’s also the “worst possible time” for farmers, who are getting into their fields to harvest their crops and need diesel to run their machinery.
When it comes to diesel costs, there’s not much that can be done, he added.
“Farmers can’t really let their crops go to waste. Trucks have to still haul goods to the market that are needed.”
