You might want to start saving up if you plan on going on any summer road trips this year, because according to predictions from analysts, prices are going to be the highest they’ve been in 10 years.
Dan McTeague, an analyst at GasBuddy, told Huffington Post that the rise is thanks to rising global oil prices and a low Canadian dollar. He says that oil prices are $16 a barrel higher than they were this time last year, and thinks that prices will continue to spike to above US$70 a barrel “at least for a while” this year. West Texas Intermediate oil hit US$67 a barrel on Wednesday, its highest level since late 2014, and it’s just going to keep going up.
“The world is getting its oil fundamentals back in balance, and supply and demand are looking a lot closer,” said McTeague.
On Wednesday, the average price per litre across Canada was $1.282 according to GasBuddy, which is 17.4 cents more than it was last year.
The value of the loonie can also mean bad news for drivers.
Traditionally, “when oil prices have gone up, the loonie has always responded (by rising), so it provided a shield for fuel prices,” McTeague said. “That’s no longer the case.” The loonie’s decline this past year has added an additional 14 cents per litre according to his estimations.
It doesn’t end there. If Alberta’s government follows through with their legislation to limit the flow of oil to British Columbia, things could get a lot worse. The provinces have been debating over the expansion of the Trans-Mountain Pipeline, which has been planned and federally-approved. Things ramped up this week when Kinder Morgan, the pipeline builder, suspended work on the expansion until the end of May and threatened to cancel the project if it doesn’t get regulatory clarity on the pipeline.
“You’d be starting at $2 a litre” for gas in British Columbia if Alberta slows the shipment of oil to the province, said McTeague. “If you can find gas, if you can find diesel.” He says that there will be “significant disruption” in the market if the provinces can’t agree on what to do about the pipeline. Currently, it supplies all of the gas and diesel needs for BC’s Lower Mainland, including Vancouver.
“There are no alternative sources and they don’t have the facilities or the infrastructure” to get oil from other sources, McTeague said.
The conflict could also affect the rest of Canada by leading to higher gas prices. It would lead to a lower Canadian dollar, and would then make global oil prices, and other commodities, more expensive for Canadians.
“Everyone would be affected by this, even those who don’t drive,” McTeague said.
Alberta’s legislation is expected to be debated next week, but for now we’d say start putting loonies in a piggy bank for this summer.