CALGARY — There will be no relief from high gasoline prices so long as unrest continues in Libya, a petroleum analyst said Tuesday as U.S.-led coalition forces pounded areas of the country loyal to leader Moammar Gadhafi..
“Gas prices will start to come down as soon as we’ve got this fiasco in Libya sorted out,” said Roger McKnight, a senior petroleum adviser with En-Pro International.
The North African country is a relatively small oil producer in the grand scheme of things, providing under two per cent of the crude needed to meet global demand. It is, however, a key supplier for Europe.
The supply worries have driven up the price of Brent crude, a benchmark oil produced in the North Sea. And that price run-up has rippled around the world, McKnight said.
West Texas Intermediate crude futures — the North American benchmark crude — added $1.18 at US$104.27 per barrel for May delivery on the New York Mercantile Exchange. In London, Brent crude gained 93 cents to US$115.84.
The crude supply situation in North America right now is actually quite good, so speculation is playing a big role in the higher crude prices, McKnight said.
“Right now I don’t think crude should be anywhere near US$100. There is a huge fear factor being built into that price.”
The fear centres around unrest in Libya spilling over into heftier oil producers in the Middle East, like Saudi Arabia.
“Then we’re going to have a major problem and a major spike in gasoline prices,” McKnight said.
Since crude oil is used to make gasoline, the effect is being felt at the pump.
The Canadian average for gasoline has been hovering just under C$1.22 per litre — around 20 per cent higher than it was a year ago at this time, according to price-tracking website Gasbuddy.com.
McKnight said the geopolitical uncertainty makes it near-impossible to predict where pump prices will go next.
Adding to the pain at the pumps is the fact that U.S. refineries tend to shut down around this time of year as they prepare for a seasonal switch to summer-grade gasoline.
Another factor is the ongoing nuclear troubles in earthquake and tsunami-ravaged Japan. That may drive up the cost of diesel fuel — another petroleum product — as Japan switches to diesel generators for electricity, McKnight said.