A petroleum markets expert says you won’t see relief at the pump any time soon.
Dan McTeague, President of Canadians for Affordable Energy, says motorists can expect a 2 cents per litre increase for gas this week, between 1.5 and 2 cents per litre for diesel, and another 1 cent a litre bump next week.
Prices in Fort Frances reached $1.55.9 a litre on Wednesday.
McTeague says there’s no end in sight for record prices, as rampant inflation and tensions in Ukraine drive fuel prices up.
“That’s going to lead to unprecedented, much higher prices,” he says, “as we head into the higher demand season.”
He says the shift from winter to summer gasoline prices will add 4 or 5 cents a litre as well.
Gasoline prices are also having an impact on the inflation rate.
Inflation has been rising steadily. Observers have been expecting the Bank of Canada to raise interest rates to battle inflation, but the rate remains at 0.25 per cent.
The BOC dropped the key rate in March 2020, during the first wave of the COVID-19 pandemic, and has maintained it at the low level since to control debt and spur economic recovery.
The annual inflation rate rose to 5.1 per cent in January, the first time it has topped five per cent since 1991.
McTeague says gas has been hit much harder. Gas prices were up 31.7 per cent compared to January 2021.
“I suspect that this time next year it’ll be the same story that we’re going to see gas prices and diesel prices, and energy prices in general, lead the charge with higher inflation,” he says, “which in turn, is going to lead to higher mortgage rates and less economic growth, and an inflationary spiral the likes of which we haven’t see since the early 1980s.”
He says sky-high inflation is a major contributing factor to our record fuel prices.
McTeague says war between Ukraine and Russia would drastically impact fuel supply and prices in the west.
Russia is a longtime ally of the Organization of Petroleum Exporting Countries and could use its influence to limit oil and gas supply or otherwise punish counties allied with Ukraine in a potential conflict.
He says, if that happens, we’d be unlikely to see an end to high fuel prices in 2022.
