No immediate relief in sight at the pumps: expert
Published Wednesday, April 4, 2012 10:14PM EDT
Last Updated Saturday, May 19, 2012 7:56AM EDT
Motorists feeling the pinch at the pumps across Central Canada should not expect any relief over the next month with the potential for gas prices to hit $1.50 per litre, says one expert.
David Detomasi, a Queen's University business professor, said it seems that large competitors have raised gas prices simply "because they think they can," and the federal government is not yet willing to step in.
"Over the next three weeks to a month, I don't think (the prices) will go down," he told CTV News Channel on Wednesday, as the cost of fuel spiked from Quebec City to Windsor, Ont.
In Toronto, gas prices increased overnight by an average of 3.7 cents per litre by Wednesday morning, to an average price of 1.39 cents per litre. The spike was less than the 4.5-cent increase that was predicted on Tuesday, however one Toronto station posted prices as high as $1.43 per litre.
In Vancouver, where prices already average $1.44 per litre, the price increase was just half a cent on Wednesday morning.
In Calgary, gas prices went up an average of 2.3 cents a litre Wednesday to hit an average price of $1.19 per litre -- almost 20 cents lower than in Toronto and 25 cents lower than Vancouver.
Winnipeg's gas prices rose to an average of $1.24 per litre overnight, while Montreal's prices fell to $1.47 cents a litre -- still the highest average price in the country, according to gasbuddy.com.
On the East Coast, Halifax saw prices drop by 0.43 cents to $1.43 cents a litre on average.
Industry analyst Roger McKnight said according to his calculations, the increase in Central Canada should have been much lower.
"The way I did the math the increase should have been about 1.5 cents, but one market leader decided 4.5 was more justified and so they went up and everyone else is going to follow," he told CTV's Canada AM.
"The sudden increase in prices that we have seen does increase suspicions in people's minds about why this is happening on a co-ordinated basis. It's the government's job to ask those questions and find out," Detomasi said.
However, with an election looming in oil-rich Alberta, it is a tricky time for the federal government to take on the oil industry, he said.
The feds may decide to take some action once the political landscape is stabilized, Detomasi said.
And there may be more pain yet to come, McKnight said. The U.S. will release a fuel inventory report later Wednesday morning. If that report shows a decrease in U.S. gasoline reserves, meaning demand is still high, prices will likely spike once more.
However, he said prices can only climb so high before motorists start cutting back on their driving.
"In 2008 the tipping point was US$4 per gallon in the U.S... Today in L.A. and New York prices are $5 a gallon and there comes a time when people say I'm not going to do that long trip, I'm not going to hop on a plane, and demand will drop off," McKnight said.
Dan McTeague, a former Liberal MP and gas price-watcher who runs the website TomorrowsGasPricesToday.com, said Wednesday the increase made little sense.
"The industry's line for the increase we witnessed today is due to the conversion from winter to summer gas. This is a lame and well worn excuse. The fact is that fuel specs in Canada, unlike the U.S., don't change with the season," said a statement on McTeague's site.
"Tonight's increase is simply an excuse to ding motorists safe in the knowledge that no one will challenge this nonsense."
Although Canada is a big player in the global oil industry, it's not big enough to influence gas prices, Detomasi said.
"Most of our oil gets shipped to the U.S. There is not a lot of relationship between the oil that gets produced in Canada and the price that we pay at the pumps."