Gasoline prices in Canada are climbing to two-year highs, and could be going higher, according to industry watchers.

In Toronto, gas prices are at 137.9 cents a litre, the highest they’ve been in two years, according to TommorowsGasPriceToday.com. At the beginning of the year, gas was 10 cents a litre cheaper.

In Vancouver, a fill-up  costs 149.1 cents a litre, 20 cents more than at the beginning of the year.

Doug Porter, chief economist at the Bank of Montreal, says the rising price of crude oil is part of the reason gas prices are going up.

So far this year, the price of a barrel of oil has risen more than five per cent, "and then when you tack on another three per cent drop in the Canadian dollar this year, it leaves oil prices up more than eight per cent in 2014," Porter said in an email to CBC News.

Crude oil is the most significant component of gasoline prices. According to a report by industry group M.J. Ervin & Associates, crude oil made up 53 per cent of the cost of gas in March.

Gas prices across Canada

  • Vancouver: 149.1 cents/l
  • Calgary: 124.9 cents/l
  • Winnipeg: 129.9 cents/l
  • Toronto: 137.9 cents/l
  • Ottawa: 136.7 cents/l
  • Montreal: 142.4 cents/l
  • Halifax: 138.7 cents/l

Source: TomorrowsGasPricesToday.com

Porter added gasoline prices tend to be seasonal, and as prime driving season starts up, prices will continue to rise. Porter says gas prices could stay strong until the second half of the year if the global economy keeps improving.

Boosting profit margins

Dan McTeague, a former Liberal MP and founder of price-tracking and forecasting website TomorrowsGasPriceToday.com, says some of the bigger corporate-run stations in Toronto have increased their profit margins.

According to McTeague, those margins have increased to eight cents per litre, up from 6.5 cents per litre 10 months ago.

According to M.J. Ervin, those margins are the smallest component of gasoline prices, at about 7.7 cents per litre in March.

Another major component is taxation, which varies from province to province. Some municipalities, including Vancouver and Montreal, impose their own gas taxes.  

McTeague also says part of the increase, particularly for crude oil and wholesale prices, is being driven by speculators in the U.S.

'For a nation that claims it is an energy superpower, it’s a strange way of showing it, particularly with high prices'- Dan McTeague, founder, TomorrowsGasPriceToday.com

“There’s a perception that the U.S. economy is getting back on track,” McTeague said.

As a result, speculators are betting prices will rise, figuring that if more Americans are working, “there will be enough demand to justify the higher price.”

Too reliant on the U.S.

Canadians are very reliant on what the price of gasoline is in the U.S. This problem is particularly bad in eastern Canada, as we don’t have enough domestic supply to cover demand, McTeague says.

Most Canadian oil, particularly from the oilsands, is shipped to the U.S. to be refined. It’s then re-imported at a higher price for use by consumers. Even the refineries in New Brunswick ship nearly 80 per cent of their oil to the U.S.

McTeague is also concerned about how much Canadians are paying for energy — and that includes gasoline for their cars and natural gas to heat their homes.

Nearly 25 per cent of our disposable income goes to energy, according to McTeague.

"For a nation that claims it is an energy superpower, it’s a strange way of showing it, particularly with high prices."