Gasoline prices see long weekend dip in parts of Canada, but analysts say relief likely won’t last

By Tom Yun, CTVNews.ca Editor

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Toronto, Canada (CTV Network) – The Canada Day long weekend saw gasoline prices plummet in parts of the country, but the relief at the pumps may not last long, analysts say.

According to GasWizard.ca, prices in the Greater Toronto Area and Ottawa fell 11 cents per liter on Friday and fell another 6 cents on Saturday, to 187.9 cents per litre.

Gasoline prices in Montreal also saw a drop of six cents on Saturday after dropping four cents on Friday. In Vancouver, prices fell seven cents on Friday and another seven cents on Saturday. Winnipeg and Halifax also saw a three-cent drop in gasoline prices on Canada Day, while prices in those areas held steady Saturday.

The declines come after crude oil prices fell in June following interest rate hikes by the US Federal Reserve, raising fears of a recession.

“The market panic, I think, is probably the best way to describe it. A little overzealous in terms of worries about recession and demand destruction,” GasWizard founder and president of Canadians for Affordable Energy Dan McTeague told CTVNews.ca on Saturday.

In Ontario, which experienced the largest declines in gasoline prices, the drop in oil prices coincided with the provincial government’s temporary gasoline tax reduction of 5.7 cents per litre. Other provinces have already reduced gasoline taxes, including Alberta and Newfoundland and Labrador.

Despite the tax cut, Roger McKnight, chief oil analyst at En-Pro International, says gas prices in Canada largely follow what happens in the United States, where there continues to be a significant gap between supply and demand.

“Awards in Canada are not made in Canada. They really follow what happens to the wholesale price in the United States. And in that regard, we have a situation where crude oil inventories are down 13% from the five-year average. Gasoline down eight and diesel down 20,” he told CTV News Channel on Saturday.

While OPEC pledged to increase production, the group fell short of its targets as Libya and Nigeria slowed output in June, Reuters reported. Earlier this week, French President Emmanuel Macron told US President Joe Biden that Saudi Arabia and the United Arab Emirates were already producing at full capacity.

“I think the reality is that we were still no better than months ago, which is to say fuel supply remains tight and demand is not sagging,” McTeague said. .

Facing pressure from voters ahead of the US midterm elections this fall, Biden has urged national oil companies to increase production, while pressuring Gulf countries to increase supply. The White House is also considering expanding offshore oil drilling in the Gulf of Mexico.

“[Biden’s] scramble to find a secure supply or a steady supply of crude, and that’s a long time,” McKnight said.

McKnight says he expects a five-cent increase in gasoline prices by Monday and says it’s unclear which direction prices will go this summer.

“It’s very hard to say,” McKnight said. “There are 16 factors that go into the price of a liter of petrol and if one of those factors changes, it changes the whole situation”

But McTeague predicts gas prices will only rise over the next two months, saying the gap between supply and demand won’t resolve any time soon.

“What we saw here last week was a bit of a fake head…not a reflection of the fundamentals,” he said. “It’s pretty clear that there will be much higher prices in July and August.”

With files from Reuters.

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