The Bank of Canada released their Monetary Policy Report and said, despite low crude oil prices, Canadians aren’t seeing much in the way of savings at the gas pump.
The report notes that while gasoline prices have fallen, they have not dropped as much as they should have based on the decline of crude oil prices. If prices had fallen as much as oil prices, there would be a total Consumer Price Index difference of 0.6% in November of 2015.
But it’s not just the price of crude oil that determines how much money you save (or don’t save) at the pump.
“Things have changed since late ’08 and early ’09,” Dan McTeague with Gasbuddy.com told Vancity Buzz. “What has changed amounts to what is a pretty significant difference in terms of gas prices.”
McTeague said there are multiple factors at play for the lack of savings at the pump. Since 2009, taxes have gone up about eight cents a litre, refinery margins have increased five cents a litre, and retail margins are up two cents a litre.
The weak Canadian dollar isn’t helping the situation either.
“At that time, 121, 122 pennies bought you one U.S. dollar. Today, it’s 141 to 145. So that’s costing another four cents a litre.”
Both the report and McTeague note the future is unpredictable. A slow economy means prices at the pump are volatile, but the loonie picking up steam is a positive sign.
“As it strengthens, it offsets or serves as a bit of a shield for tired global prices for gasoline,” he said.
“But it’s very difficult to make long-term predictions for the price of gasoline.”
A barrel of crude oil was trading at about $29.53 per barrel at the time of publication. The Bank of Canada said prices are 75 per cent lower than they were at their peak in June of 2014.