Gas prices have been creeping up all winter. As of writing this, the national average is hovering around $1.12 per litre. Experts predict prices in spring will be even higher — probably up to $1.20 to $1.30 per litre.
The spectre of continuously rising gas prices is scary, particularly if you’re prone to apocalyptic thoughts and/or driving a 1972 Buick Estate Wagon.
But according to Roger McKnight, a petroleum analyst with En-Pro International, the fear of gas prices running out of control because of insatiable worldwide demand is not based in reality.
“There is lots of inventory,” says McKnight.
In his opinion, the current higher-than-normal prices are attributable to the current high cost of crude oil — plus the actions of the oil companies.
“If they were just following the cost of crude, gas prices right now should only be about eight per cent higher than last winter. Right now we’re about 15 or 16 per cent higher.” He figures the extra spread is just the fuel companies jacking up their profit margins.
Another factor, according to McKnight, is that the oil companies are not currently adding to their stock of gasoline inventories. Refineries typically run on a two-season schedule: heating oil and other products from May to September; gasoline from October to March. Usually they shut down refineries in mid to late February, for maintenance and “change over” activities.
This year they’ve scheduled these down times for mid-January.
“I’m guessing they’re feeling gas inventories are too high,” said McKnight. Which leads the rest of us to not guess why we are so cynical about fuel companies.
Another gas price expert is Jason Toews of gasbuddy.com, which helps you find the stations in your area with the lowest gas prices. Toews says the increasing optimism in the economy will also keep prices high through spring and beyond, adding that optimism translates to more driving, and more speculators driving up crude prices.
Will all this cause rioting in the streets? Not likely.
“We’ve become desensitized to high gas prices,” says Toews. “A dollar a litre doesn’t scare anybody anymore.”
This sentiment is borne out by the vehicle sales charts. When gas prices spike, we no longer seem to run to smaller vehicles. We buy the type of vehicle we want, drive when we want, and just seem to grin and bear it at the pumps.
Is there a tipping point? A pump-price that will make us change our driving and/or purchasing behaviours? McKnight says Americans freak out when their gas hits four dollars a gallon, but wasn’t sure what it would take to shock Canadians. Toews thinks $1.60 to $1.70 a litre would do the trick.
I don’t think Bruce Cockburn was thinking about gas prices when he penned the lyrics, “The trouble with normal is it always gets worse.” But he might as well have been.