An acute energy crisis is making its presence felt in North America as consumers finally feel the pinch of too high prices to fill their cars and heat their homes.
The average retail price of gasoline in Canada rose to $1.45 a liter on Wednesday, according to data compiled by retail analytics firm Calibrate.
That’s a rise of three percent from Tuesday’s level and enough to break the previous record of 143.6 cents set this August. Before, you had to go back many years to see the high gas prices.
Research analyst Suzanne Gray told businesshala News in an emailed statement that the average pump price was $1.40 a liter first in 2008 and then $1.41 a liter in 2014.
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While there are many factors that determine the price of retail gasoline, the price of oil is one of the biggest, and worldwide crude prices have risen back in recent months as supply and demand are proving more volatile than usual. The economy is trying to emerge from the depths of the pandemic.
Highest level in 7 years
Like everything else, oil prices took a goose dive in the early days of the pandemic, as travel slowed, factories closed up shop and the world economy effectively went into hibernation.
The slowdown lasted in April of 2020 as the price of oil fell below zero for the first time on record. Oil traders literally couldn’t afford a barrel of oil, even though it was free.
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The oil rig went into survival mode to make it through the pandemic. But as demand started coming back, so did the prices. After falling barely below zero a year ago, crude oil prices are now back at a seven-year high, a level that analysts say is approaching higher.
“We’re probably going to see an uptick in prices by the end of the year, unless we see another kind of COVID acceleration,” said Rory Johnson, founder of Commodity Context newsletter and managing director of Toronto-based investment firm Price Street. .
Generally, oil prices drop in the winter as demand for driving and flying in the Northern Hemisphere declines. But COVID has thrown the usual seasonal patterns out the window entirely.
“With all the demand reduction and these random reopening paths we’re in globally, it’s really hard … as a very common seasonal pattern,” Johnson said. “I think it still remains to be seen whether this happens or not.”
Edward Moya, an analyst at forex firm Oanda, says crude oil prices may have more room.
“The oil market is still in huge losses and this will likely be a winter story. If there is a cold winter in the north, the potential for $90 oil is very high.”
global energy crisis
High pump prices are perhaps the most obvious example that consumers notice, but in reality, what Canadians pay at the gas station is now only catching up to what the rest of the world has been seeing in energy for some time. Simply put, the price of everything is skyrocketing.
Natural gas prices in Europe and Asia have skyrocketed in recent months as demand has risen at a time when supply has never been less.
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Much of Europe is getting colder than usual, prompting Europeans to reach for the thermostat. But supplies are lower than normal as exports from major suppliers such as Norway and Russia are low.
According to data from Gas Infrastructure Europe, the association of gas companies on the continent, Storage tanks are about a quarter empty Immediately. Usually at this time of year, they will be completely full before the colder months to come.
Natural gas prices have risen more than five-fold in recent months, with more increases expected.
Europeans aren’t the only ones short on gas; China finds itself with dire demand for energy, forcing gas exporters to turn to the highest bidder. Rolling blackouts and closed factories are the norm in China right now, as the world’s most populous country is having trouble keeping the lights on as things reopen from COVID-19.
It has gotten so bad that it has announced a temporary break in its ongoing trade war with Australia, because it is so desperate for coal.
In the UK, gas stations are running out of fuel, which brings little relief.
Utility bills are expected to rise in BC, Ont.
While this kind of drama hasn’t happened in North America yet, consumers should expect their bills to rise.
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BC’s main gas distributor, FortisBC Energy Inc. warned customers in September that The average bill is set to go up Between nine and 12 percent from this month. and Ontario’s largest gas company, Enbridge, has applied with the regulator of the province To increase the fee that is charged to consumers starting from January.
“As if we don’t have enough sources of inflationary pressure,” Bank of Montreal economist Doug Porter said in a note to clients on Thursday.
Rising worldwide demand “points to further higher prices for Canadians to heat their homes this winter,” he said.
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Kit Jacques, a strategist at the French investment bank Société Générale, says energy prices are rising so much that he expects governments around the world to eventually step in.
“How much subsidies governments will eliminate for gas use will vary from place to place,” he said in a note to customers on Wednesday.
“In the long run, we don’t think current prices are sustainable, but the short run will matter more in the coming weeks.”