CALGARY — Canadian motorists can expect the price of gasoline to hover in its current range throughout the summer, the National Energy Board predicts in its latest energy outlook released Thursday.
Pump prices are to a large degree tied to the cost of its main ingredient, crude oil, which the NEB predicts will average between US$50 and $60 per barrel over the next few months.
“With that outlook for crude oil prices, we would not expect prices for gasoline to approach the levels we’ve seen last summer,” said oil market analyst Christian Rankin.
Consumers gassed up their vehicles for upwards of C$1.40 per litre in many parts of Canada last summer, as the crude oil prices hit a record US$147 per barrel.
On Thursday the average gas price across Canada was about C$1 per litre, up from 90 cents a litre a month ago but down from $1.32 at this time last year, according to the price-tracking website Gasbuddy.com.
Rankin said he does not expect to see much deviation from current prices throughout the summer.
Crude rose above US$65 on the New York Mercantile Exchange Thursday for the first time in 2009, as the Organization of Oil Exporting Countries stood firm on crude production levels and the U.S. government released two positive economic reports.
A few factors unrelated to crude prices have been behind the bump in gasoline prices to above the C$1 threshold recently.
One is that U.S. gasoline inventories are below their five-year average and are trending lower, the NEB said in its outlook.
The summer driving season is also underway, as more motorists take to the highways and drive up demand for gasoline.
“Although it’s picking up over the summer, it still remains to be seen how much (demand) will pick up due to the fact that we’re still in recession,” Rankin said.
“Pump prices are well below where they were last year and certainly that will help consumers get a little bit of a break in this tough economic environment.”
There are many factors at play that could tilt crude prices to either end of its predicted $50 to $60 range, the NEB said.
“Improving economic conditions will likely mean oil will hold near the top of this range and could move higher, supported by OPEC production cuts, ongoing geopolitical risks and higher seasonal demand,” it said in its report.
“On the other hand, if economic conditions deteriorate, prices are likely to move toward the lower range as the market focuses on high inventories and very weak demand.”
Also Thursday, the NEB said the price of natural gas, a fuel used to produce electricity and heat homes, is expected to average between $3.20 and $4.20 per thousand cubic feet, amid a continuing supply overhang brought on by strong U.S. production and growing imports of liquefied natural gas from overseas.
“Natural gas demand will remain weak over the summer period as the global economic downturn reduces industrial demand,” the NEB said.
“Furthermore, storage levels are currently almost 600 billion cubic feet higher than last year, suggesting that North America will be amply supplied with gas in the short term.”