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Here's why gas prices are so high, and what to expect next


Daniel Martins
Digital Reporter

Saturday, November 18, 2017, 4:43 PM - You haven’t been imagining it: Gas prices have been higher than normal over the past few weeks, and with winter coming, fuel expert Dan McTeague expects there’s not much prospect for improvement.

Not only that, but McTeague, GasBuddy.com's senior petroleum analyst for Canada, warns that the higher fuel prices will have a knock-on effect across the board.

“This time last year, average prices in Canada were about 20, 21 cents a litre less expensive,” McTeague told The Weather Network. “That will obviously show up at some point down the road, in terms of the cost of living index and CPI and other benchmarks, which would demonstrate that the days of cheaper energy prices may very well be behind us.”

McTeague says it’s the first time in five years where fall prices exceed the average price of summer gas for the year, which tends to be a little higher due to additives to make it more stable during higher temperatures.


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Though Canada is an oil-producing nation, gas prices are typically higher here than south of the border, and overwhelmingly determined by U.S. factors. In this case, McTeague says much of the hike is due to “heavy and significant” demand for gasoline in the U.S., along with a slightly weaker Canadian dollar and delayed effects from Hurricanes Irma and Harvey, which hit parts of the U.S. where much oil is refined. Those hits delayed fall maintenance and interrupted supply, leading to higher prices, McTeague adds.

In the longer term, McTeague says OPEC (Organization of Petroleum Exporting Countries) and other countries caused a glut of production in 2014 that depressed prices somewhat, and that has finally begun to drain.

U.S. weather vs. Canadian gas prices

McTeague says not to expect much relief at the pumps as winter really gets going. Weather in the U.S. has a demonstrable effect in pump prices in Canada, due to impacts on refineries down south.

McTeague says La Nina is expected to influence the winter in parts of North America this coming season, meaning higher prices, as more crude is converted into diesel, furnace oil and other fuels. He says cold weather may also hurt production itself, such as in 2013, when extreme cold temperatures caused some refineries to actually freeze, limiting supply and boosting prices.

“Warmer, nicer, calmer weather usually means better prices, despite the other fundamentals,” McTeague says. “But weather in and of itself could lead to a much more expensive year, and we will see what happens in the futures markets.”

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