Gas prices spike across Canada
Posted: Sep 12, 2012 1:05 PM AT
Last Updated: Sep 12, 2012 11:06 PM AT
Motorists in much of Canada got a rude shock overnight when gasoline prices rose sharply.
Among the hardest hit was Montreal, where prices reached as high as $1.53 a litre for regular, up 13 cents a litre and an increase of almost 20 cents since the start of summer.
Price tracking website GasBuddy.com reported gasoline could still be had in some stations in the city for as low as $1.30.
At one downtown Montreal gas station, there were fewer motorists than usual filling up their tanks Wednesday morning.
"We're being whacked," said Jared Lang, who had to pay $1.51 a litre to fill up.
"I don't even want to fill up my car. I put in maybe $10 to $15 at a time, hoping it goes down and I live with it."
Lang recalled that when he started driving more than 20 years ago, he remembers paying about 40 cents a litre and he quipped: "It's not like the minimum wage has gone up five times since then."
He also said that he tries not to drive as much as possible in order to save money.
Lindsay, who would only give her first name, also said she doesn't drive as much as she used to.
Average national price rises 1 cent
"There's politics around it, there's greed but personally all I can do is try and save myself," she said as she tanked up her subcompact fuel-efficient Honda Fit. "I drive a car which saves on gas, I bought it specifically for that and I don't drive when I don't need to."
Her last vehicle was a Honda Civic. She said her choice in cars wasn't just about saving money: "It's about the environment as well."
GasBuddy reported the average price nationally at $1.315, up more than a penny from Tuesday.
Gasoline prices across southern and eastern Ontario rose by about 3.4 cents at midnight, according to the website tomorrowsgaspricestoday.com, a page compiled by gas price watcher Dan McTeague.
McTeague said he can't see a reason for the increase, other than a money grab, and his website calls the hike "absurd and unjustified."
Roger McKnight, senior petroleum adviser with Oshawa-based energy consultants En-Pro International, described the hike as “crazy,” telling CBC News there was no reason for oil companies to raise prices when the demand for gasoline is flat to negative.
“There is absolutely no reason for this price increase at this time, especially for gasoline, when the driving season is finished as of Labour Day,” McKnight said.
But another analyst who provides services to the industry offered a more generous interpretation for the price hikes.
Jason Parent of Kent Marketing of London, Ont., says there are good reasons for the increase — and "sometimes you have to dig and scratch to find them."
Parent says wholesale prices have been rising over the last week and significantly so in the last few days, with several factors coming into play.
"One [factor] is the refineries that were shut down because of the hurricane in the southern [United] States," he said in an interview.
"They are back on line but that put a huge crimp in the supply which flows all the way up the Eastern Seaboard in the U.S. and into Canada."
Parent says there have also been refinery issues in the Detroit and Chicago areas, where there were planned shutdowns for various reasons, including maintenance.
"That's what's driven prices up recently — despite the fact that the price of crude has been relatively steady," he said.
The increase prompted many drivers in the Toronto area to fill up before midnight, causing lineups of up to 30 vehicles long at some service stations.A driver fills up in Montreal Wednesday. (Ryan Remiorz/Canadian Press)
Prices for regular in the greater Toronto area ranged from $1.25 to just under $1.37 a litre, and from about 1.26 to $1.34 in the Ottawa area.
Winnipeg ranged from $1.18 to $1.22. Across the prairies, according to GasBuddy, prices ranged from below $1.17 to almost $1.30.
In B.C., it said there were locations where the price was as high as $1.34
Prices in the Atlantic provinces are regulated and were expected to rise Thursday or Friday, depending on the province.
The price of North American benchmark crude trading in New York, light sweet crude for October delivery, actually closed lower by 16 cents at $97.11 a barrel US. It fell after the U.S. Energy Department said inventories unexpectedly climbed last week by 1.99 million barrels to 359.1 million.
Earlier, it had risen nearer to $98 US a barrel after a German court ruling favoured a bailout fund for deeply indebted eurozone countries and traders awaited a key U.S. Federal Reserve meeting expected to end with the announcement of a stimulus plan for the U.S. economy.
Oil prices have been caught between a push-pull of two events: the so-called shoulder period for fuel demand, and the start of a two-day meeting of the Federal Reserve's Open Market Committee.
Oil prices trend lower during shoulder periods — the time of year between summer, when gasoline is in high demand as drivers take to the road for vacation, and the winter when there is strong demand for heating oil.
Fed action could prompt more demand
But Fed action to help the U.S. economy might mean more demand for oil and other energy products — and higher fuel prices.
Another impetus for oil prices to rise came out of Germany on Wednesday, when the country's high court gave the government the go-ahead to participate in a European bailout fund.
While the decision contains certain conditions, it means the European Stability Mechanism can be signed off by the country's president so it can come into force by the end of the year.
"The German constitutional court's decision is supportive of strong oil prices but the impact is fairly neutral," said Caroline Bain, commodities analyst at the Economist Intelligence Unit in London.
"If the court had ruled the bailout fund illegal then we would have expected a sharp fall in oil prices and in commodity prices more generally as the implication would have been for a return to heightened levels of financial market volatility and an exacerbation of the euro zone sovereign debt crisis."
Meanwhile, the International Energy Agency said the global pace of demand growth over the next 18 months would stay "relatively steady," with demand expected of rise by 800,000 barrels a day both this year and next.
The Paris-based IEA forecast global oil demand of 89.8 million barrels a day in 2012 and of 90.6 million barrels in 2013, both up just marginally from its previous report released in August. The IEA said the adjustments reflected data revisions for 2011.With files from The Canadian Presss and The Associated Press
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