Gasoline prices spike

Motorists in many cities across Canada got some sticker shock at the gas pumps Friday, with prices up three cents or more per litre in places, including Vancouver where they topped a whopping $1.37 for regular.

TORONTO — Motorists in many cities across Canada got some sticker shock at the gas pumps Friday, with prices up three cents or more per litre in places, including Vancouver where they topped a whopping $1.37 for regular.

Prices were also up more than three cents per litre in Toronto, where the average was just under $1.32 a litre, according to price monitoring website

Montreal was showing a smaller increase of just under a penny a litre, but that raised the average price in Quebec’s largest city to almost $1.36. Elsewhere, Halifax held steady at $1.33, Regina was up two cents at $1.287 and Edmonton was up six-tenths of a cent at $1.163.

Nationally, the average price was a little over $1.28 per litre, with average prices ranging from a low of just under $1.18 in Alberta, up seven-tenths of a cent, to a high of almost $1.38 in Newfoundland, up a penny.

However, those prices were still below the national average all-time high of just over $1.42 a litre for regular unleaded set in September 2008 amid hurricane weather in the Gulf and just a couple of months after West Texas intermediate crude spiked to a record intraday high in July of US$149.68 a barrel on the New York Mercantile Exchange.

There was relief of sorts in the Northwest Territories, however. Prices there dropped 10.4 cents Friday, but that still left the average cost per litre at about $1.37, second highest in the country after Newfoundland.

South of the border gasoline prices, although nowhere near as high as in Canada, have increased for 24 straight days and now top US$4 a U.S. gallon (3.78 litres) in five states and could rise to that level in a number of other areas by the weekend, experts say. The last time U.S. drivers saw prices that high was in the summer of 2008, just before the economy went into a tailspin.

The rapid increase at the pump follows a parallel rise in crude, which had been rising slowly since 2009 but gained momentum as the Libyan rebellion effectively shut down its exports. Crude has jumped 28 per cent since the uprising began in the middle of February.

Oil fluctuated this week amid uncertainty about how much higher it could go, but it resumed its climb on Friday, rising $1.55 to close at US$109.66 on the New York Mercantile Exchange.

Michael Ervin of energy consulting firm Kent Marketing Services Ltd. said Friday’s gasoline prices reflect both the current price of crude oil and the “normal” refiner margin, which wasn’t the case back in 2008.

“What’s different is when we saw those (crude oil) highs in 2008 the price was much less high than it would have been because at that time … North American gasoline demand was way down and that created and unprecedented situation where the refiner margin was very depressed in the springtime at a time when it’s usually very high.”

“We saw relatively high gasoline prices, but much lower than they normally would have been had the normal seasonal rise in the wholesale price taken place.”

This year, besides the recent bump in crude oil prices, there has also been a return of strong demand for gasoline, allowing the refiner margin to show its usual seasonal increase.

“That’s a tough one to explain to consumers, because people don’t generally understand what a refiner margin is all about and don’t understand it increases and decreases according to that commodity’s availability,” Ervin said.

Jason Toews, a co-founder of, agreed that demand and refiner margins along with other factors are boosting pump prices.

“There’s a few things going on right now,” he said. “Of course crude oil is back over $100 per barrel,” and crude oil makes up around 70 per cent of the cost of a litre of gasoline (at current prices).

But Toews added that this is also the time of year when there is a switchover from winter to summer fuel and when some refining capacity is often taken down for maintenance.

“Also, here in Canada, and I’m in Regina, … the weather is cold in the winter, the days are short and the roads are icy and people generally don’t like to do much driving.”

“So when the spring comes the weather has improved, the roads dry, days are longer and people like to do more driving,” driving up demand for gasoline, he said.

“And of course crude oil is high because of some of the international factors, like Libya …. and some of it is speculation, speculators pushing up the price of crude oil and as a result gasoline,” he added.

Meanwhile, Ervin figures prices have peaked, barring “some unprecedented change in crude prices, which I don’t believe will happen, at least based on foreseeable factors.”

“I think the refiner margin is not going to get any bigger. In fact the high margin is encouraging some refinery capacity, which was curtailed in the wake of low demand. Some of that refinery capacity is going to come back on stream in order to, frankly, take advantage of the high margins which, in turn, will create some margin destruction.”

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