With the price of crude oil continuing its summertime climb to hit a record high of $50 US per barrel last week, Canadian consumers are feeling the pinch at the gas pumps.
“We’ve seen some dramatic responses in some of the energy commodities to price shocks and I’m expecting to see some similar things in some aspects of the petroleum markets,” Tom Adams, executive director of Energy Probe, a national consumer and environmental research group, said.
He pointed to the virtual shutdown of the fertilizer industry in North America in 2000-01 when prices spiked for that sector’s main raw material – natural gas.
August’s sales record for the fuel-efficient Honda Civic car in Canada shows how consumers are already opting for more fuel-efficient cars. Analysts note that every $5-a-barrel increase in oil prices pushes gasoline prices up by nearly four cents a litre in Canada. And with half the fleet of North American cars made up of gas-guzzling SUVs and similar models, the latest oil price rise is squeezing consumers.
“North Americans are getting whacked now for the automobile-buying choices that we have been pursuing in the last 10 years,” Adams said.
“We’ve switched to rear-wheel drive, big, heavy machines, with a big increase in the amount of fuel to travel one kilometre on average across North America. So that has really left us exposed.”
According to Calgary’s MJ Ervin and Associates Inc., the price for a litre of regular gasoline rose by an average of 2.9 cents to 87.2 cents across Canada over the last week, with Yellowknife leading the country at 99.9 cents per litre and Lethbridge selling at the low end – 76.9 cents per litre.
“We typically see gasoline prices decline at this time of year just because the peak driving season is over, so the peak demand for gasoline more or less wraps up around Labour Day,” said MJ Ervin’s Catherine Hay.
“Because we’re not in the peak demand season, and won’t be again till the spring, we’re somehow being protected from a stronger price hike. But there’s no doubt we’re seeing a little bit of upward movement as a consequence of the higher crude prices.”
As a rule, prices at Canadian pumps increase by a little less than a penny for every $1 US per barrel boost, Hay said.
But, she said, because of the increased demand for gasoline in the summer, prices are still lower than in early June.
However, Canadians have long been coddled by low gas prices. During the 1970s and early 1980s, while American consumers were faced with skyrocketing gas prices, Canadian drivers were protected from high pump prices by Liberal government policy that cushioned domestic oil prices at well below world prices.
