CALGARY – Gassing up your vehicle is expected to be relatively cheap this summer – one of the few silver linings to the recent economic misery.
The warmer weather normally brings with it ramped up demand for gas as motorists take to the highways for summer road trips.
A staggering rise in gas prices to around $1.40 per litre outraged drivers across Canada last year as the cost of that product’s main ingredient, crude oil, soared to a record high of US$147 per barrel.
But this year, industry observers are predicting a relatively subdued summer driving season, which runs from May to September, as consumers keep a closer watch on their spending.
“You’re not going to see the annual panic at the pumps because the price of crude is way below what it was last year and there is no demand for the product that you use the crude to produce,” said Roger McKnight, senior petroleum adviser for En-Pro International Inc. in Oshawa, Ont.
“You may see a little bit of a spike, say about five cents a litre on an annual basis. But all in all I see where prices are today is where they’re going to stay throughout the summer.”
The average gas price across Canada has been hovering in the 88 to 90-cent-a-litre range over the past few weeks, according the price-tracking website GasBuddy.com.
That’s the lowest it’s been for this time of year since 2004, said GasBuddy co-founder Jason Toews.
One reason is that the price of crude oil, the raw product from which gasoline is made, is currently worth about US$50 per barrel.
A year ago, Canadians were on average paying more than $1.21 per litre and crude prices were edging toward the US$120 per barrel mark.
Toews is predicting a bump in pump prices over the next few months, though it won’t be anywhere near as eye-popping as the 2008 level.
“I’m expecting the gas prices in Canada to go up over the next couple of weeks here before the Victoria Day long weekend. We’re probably going to see gas prices peaking at somewhere around $1.05 per litre,” he said.
Motorists’ ideas of what constitutes a gas-price bargain has changed a great deal since last summer’s enormous spike, Toews added.
“When gas prices first broke $1 per litre, everybody and their dog was upset about gas prices. You heard a lot of talk about boycotting the oil companies,” he said.
“After seeing $1.40 per litre gas across the country last summer, it really puts it into perspective and we kind of like these cheap prices now. Ninety cents per litre doesn’t scare anybody anymore.”
Our southern neighbours will also enjoy a respite from pump price pain, according to the U.S. Energy Information Administration.
Regular-grade gasoline is expected to average US$2.23 per gallon, the equivalent of 71 cents per litre. Last summer U.S. gas prices averaged the equivalent of C$1.21 per litre.
Both Toews and McKnight caution that the easing in gas prices won’t last forever.
“I think we’re going to see the return of really high gas prices once the economy recovers,” said Toews.
“This is kind of a temporary reprieve from the high gas prices because of the recession.”
Crude producers in Alberta’s oilsands and around the world have been throttling back their production in response to dismal global energy demand.
But as soon as worldwide economic recovery kicks in, there is a risk of a big crude price spike as production lags the ramp up in demand.
“These things aren’t like going to McDonald’s and turning on the vanilla milkshake machine. It takes a lot of time to get these things back online,” McKnight said.
“We will come out of this recession. It’s just a matter of when… And then you’ll see crude prices like you’ve never seen before in your life.”