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Gas prices expected to level off next year

Just in time for the holidays, prices at the gas pump rose 2.1 centsovernight, pushing the cost of a litre of regular gas to $1.13.<br />

Just in time for the holidays, prices at the gas pump rose 2.1 cents overnight, pushing the cost of a litre of regular gas to $1.13.

But motorists should find some solace in knowing that prices aren’t likely to climb much higher — for now at least.

“This is the highest it’s going to get for the foreseeable future,” said Liberal MP and gas price watcher Dan McTeague.

Rising crude oil costs, increased competition, and a falling U.S. dollar have all factored into rising fuel prices this year.

But the Harmonized Sales Tax, which merged GST and PST on July 1, has had the most pronounced effect on fuel costs in Ontario, with gas prices subject to eight per cent more in taxes.

By comparison, last year at this time, gas prices around Toronto were sitting at 94.2 cents per litre.

“Across the board, we’ve seen an eight to nine cents increase based on the HST,” said McTeague. “One thing’s for sure, the federal government has increased its tax bite.”

With the economy still on shaky ground, demand down, and supply up to record levels, McTeague sees gas prices dampening in 2011.

Continuing efforts in the U.S. to curb speculation and over-leveraging in the commodities market will also likely place a cap over the price of crude and subsequently cool gas prices north of the border.

Tuesday’s spike is just the latest in what has been a volatile two months for gas prices in Canada.

And at least one analyst believes the trend will continue as long as the U.S. dollar and crude oil prices oscillate.

“If the U.S. dollar goes up, crude goes down and then (pump) prices go down,” explains petroleum analyst Roger McKnight, who says gasoline prices aren’t following the laws of supply and demand, noting there’s a “huge” supply and “anemic” demand.

McTeague says Canada should have a weekly report on petroleum, keeping track of supply and demand.

“That would allow people to know whether we have a shortage or whether or not demand is up and prices should be up,” McTeague said.

 
 
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