Prepare to pay more for gas than ever before.
By May, gas prices in the GTA could ratchet up by anywhere from 5 cents to 20 cents per litre.
Prices at the pump have already climbed by about 7 cents to 128.7 cents per litre in the last month. And while it is normal for gas prices to climb in the spring as motorists drive more and refineries close for maintenance, there are more factors at play this year.
How high can the prices get?
Jason Toews, co-founder of Gasbuddy.com anticipates prices reaching a record-breaking 150 cents to 155 cents per litre by May. Last year gas prices reached a record high of 140.6 cents.
Petroleum analyst Robert McKnight says prices will reach between 143 cents to 147 cents a litre by April. That is a 12 to 15 per cent increase from the pump price you see today, he said.
Michael Ervin, vice-president of Calgary-based Kent Group, has a more conservative prediction of 4 cent to 7 cent per litre increase — in line with a normal seasonal increase.
What are causes for concern?
• Iran speculation.
The recent spike in crude oil prices is in part down to analyst speculation over Iran threatening to halt oil exports to Britain and France. The threat is in reaction to sanctions over the country’s nuclear program from the European Union and the United States, says McKnight.
He says the situation isn’t serious. Iran’s oil exports are barely a fraction of the oil usage of Britain and France. And any change in Iran’s oil exports will be made up for by the other oil-producing countries in the region
Still, “Iran is the wild card,” says Toews. If war breaks out in the Middle East, disrupting supply not just from Iran but other countries in the region, prices could reach 200 cents per litre.
• Price of crude.
Ervin’s conservative gas price prediction is based on the assumption crude oil prices are unlikely to change much over the next few months. OPEC won’t tighten supply and jack prices while the global economy remains fragile, he says.
However, demand for crude oil in rapidly growing economies like China and India are driving up prices and that’s bad news for Canada, says Toews. Canada might have lots of oil, but it’s still sold to the highest bidder — there are no domestic discounts, he says.
• Refineries.
The recession has left North American refineries with enough spare capacity to absorb minor disruptions like the Washington refinery fire, Ervin says. That also means refineries have the ability to supply the seasonal demand, mitigating the gas price increases.
However, McKnight says refinery closures mean things will get “real bad real quick” and will stay that way until mid-July instead of decreasing after Victoria Day weekend.
While it is normal for gas prices to go up between March and April, they’ve never increased in January and February, he says. He points to the impending closure of three refineries in Philadelphia, one in the Virgin Islands and the bankruptcy filing of Petroplus, Europe’s largest independent oil refiner, as limiting gasoline supply to New York Harbour, where gas prices are forecast.
Added to that, it’s more profitable for refineries to sell gasoline to Latin America and other emerging economies where there is strong demand, rather than in North America, he says.
Original Article
Source: Star
Author: Alyshah Hasham
By May, gas prices in the GTA could ratchet up by anywhere from 5 cents to 20 cents per litre.
Prices at the pump have already climbed by about 7 cents to 128.7 cents per litre in the last month. And while it is normal for gas prices to climb in the spring as motorists drive more and refineries close for maintenance, there are more factors at play this year.
How high can the prices get?
Jason Toews, co-founder of Gasbuddy.com anticipates prices reaching a record-breaking 150 cents to 155 cents per litre by May. Last year gas prices reached a record high of 140.6 cents.
Petroleum analyst Robert McKnight says prices will reach between 143 cents to 147 cents a litre by April. That is a 12 to 15 per cent increase from the pump price you see today, he said.
Michael Ervin, vice-president of Calgary-based Kent Group, has a more conservative prediction of 4 cent to 7 cent per litre increase — in line with a normal seasonal increase.
What are causes for concern?
• Iran speculation.
The recent spike in crude oil prices is in part down to analyst speculation over Iran threatening to halt oil exports to Britain and France. The threat is in reaction to sanctions over the country’s nuclear program from the European Union and the United States, says McKnight.
He says the situation isn’t serious. Iran’s oil exports are barely a fraction of the oil usage of Britain and France. And any change in Iran’s oil exports will be made up for by the other oil-producing countries in the region
Still, “Iran is the wild card,” says Toews. If war breaks out in the Middle East, disrupting supply not just from Iran but other countries in the region, prices could reach 200 cents per litre.
• Price of crude.
Ervin’s conservative gas price prediction is based on the assumption crude oil prices are unlikely to change much over the next few months. OPEC won’t tighten supply and jack prices while the global economy remains fragile, he says.
However, demand for crude oil in rapidly growing economies like China and India are driving up prices and that’s bad news for Canada, says Toews. Canada might have lots of oil, but it’s still sold to the highest bidder — there are no domestic discounts, he says.
• Refineries.
The recession has left North American refineries with enough spare capacity to absorb minor disruptions like the Washington refinery fire, Ervin says. That also means refineries have the ability to supply the seasonal demand, mitigating the gas price increases.
However, McKnight says refinery closures mean things will get “real bad real quick” and will stay that way until mid-July instead of decreasing after Victoria Day weekend.
While it is normal for gas prices to go up between March and April, they’ve never increased in January and February, he says. He points to the impending closure of three refineries in Philadelphia, one in the Virgin Islands and the bankruptcy filing of Petroplus, Europe’s largest independent oil refiner, as limiting gasoline supply to New York Harbour, where gas prices are forecast.
Added to that, it’s more profitable for refineries to sell gasoline to Latin America and other emerging economies where there is strong demand, rather than in North America, he says.
Original Article
Source: Star
Author: Alyshah Hasham
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