A petroleum markets expert says you won’t see relief at the pump any time soon.
Dan McTeague, President of Canadians for Affordable Energy, says Nova Scotia could see a 2 cents per litre increase for gas this week, between 1.5 and 2 cents per litre for diesel, and another 1 cent a litre bump next week.
McTeague says there’s no end in sight for record prices, as rampant inflation and tensions in Ukraine drive fuel prices up.
“That’s going to lead to unprecedented, much higher prices,” he says. “As we head into the higher demand season.”
He says the shift over from winter to summer gasoline prices will add 4 or 5 cents a litre as well.
Inflation hits 30 year high
Inflation has been rising steadily, observers have been expecting the Bank of Canada to raise interest rates to battle inflation, but the rate remains at 0.25 per cent.
The BOC dropped the key rate in March 2020, during the first wave of the COVID-19 pandemic, and has maintained it at the low level since, in an effort to control debt and spur economic recovery.
Statistics Canada released its inflation data Wednesday. The annual inflation rate rose to 5.1 per cent in January, the first time inflation has topped five per cent since 1991.
McTeague says gas has been hit much harder. Gas prices were up 31.7 per cent compared to January 2021.
“I suspect that this time next year it’ll be the same story, that we’re going to see gas prices and diesel prices, and energy prices in general, lead the charge with higher inflation,” he says. “Which in turn is going to lead to higher mortgage rates and less economic growth, and an inflationary spiral the likes of which we haven’t see since the early 1980s.”
He says sky high inflation is a major contributing factor to our record fuel prices.
Ukraine-Russia tensions impacting price of fuel
McTeague says war between Ukraine and Russia would drastically impact fuel supply and prices in the west.
Russia is a longtime ally of the Organization of Petroleum Exporting Countries and could use its influence to limit oil and gas supply, or otherwise punish counties allied with Ukraine, in a potential conflict.
He says, if that happens, we’d be unlikely to see an end to high fuel prices in 2022.
