"Festive gift" of low gas prices won't last long: Canadian analyst

Dec 8 2022, 11:27 pm

It seems Canadians have been treated to an early Christmas gift at the pumps.

Gas prices are down $0.50 per litre from where they were five weeks ago, but one Canadian analyst says the freefall won’t last long,

Roger McKnight, a senior petroleum analyst at En-Pro International, says his predictions may sound like he’s “Mr. Grinch,” but the takeaway is that it might be a good idea to fill the tank sooner rather than later.

“Consumers have been given some early festive gifts this season ā€“ the continuance of the freefall of gasoline and diesel prices,” McKnight said in a weekly energy report Thursday. “But beware this freefall, because it may not be for long, and you may need to grab your parachute.”

Globally, the supply of crude oil and refined gasoline remains tight. US stores of fuel are down 9% compared to the five-year average — and that’s where Canada gets most of its gasoline from.

Plus, China just relaxed its COVID-19 restrictions, which could create a sudden demand for crude as citizens of that country get moving again.

This is all happening amid the continuing military conflict in Ukraine. Many nations have imposed sanctions on Russian oil products as punishment for it invading Ukraine. Recently, G7 countries agreed to a $60 per barrel cap on Russian crude — meant to reduce its revenues from selling oil.

But China and India, two of the world’s largest importers, aren’t in agreement with the cap, McKnight said.

“To cripple Putinā€™s finances, you need a lower cap. But if you do that then all he has to do is cut back production and jack up global crude prices and then pump prices will follow suit,” McKnight said.

He added the situation is not ideal as consumers in North America deal with a “tug-of-war” between recession and inflation.

“Enjoy your sale-priced fossil fuel gifts today because [soon] they’ll no longer be on sale,” McKnight said.

Megan DevlinMegan Devlin

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