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Stiff competition caused many stations to cut gas prices so deeply they were operating at a loss this summer. Now, retailers have raised the price at the pump as they face an increase of their own from wholesalers.
Drivers in Saskatoon faced an increase of around 10-cents-a-litre at most stations.
Dan McTeague, the senior petroleum analyst at Gasbuddy.com, said Canadian prices tend to reflect trends in the U.S.
“There were two factors: on the weekend, reports that some U.S. Midwest refineries were going to experience some difficulty and the second was yesterday’s weekly U.S. petroleum inventory report,” he said.
That report showed American supplies of gasoline decreased by about 3 million barrels, the first time inventories came down in the last 10 weeks. McTeague said this caused some speculators to bet prices were due to rebound and prompted wholesalers to raise their prices — despite hundreds of millions of barrels of gasoline still sitting in storage.
“The reality is, we’re seeing very much a gas glut and that’s going to continue to keep downward pressure on prices. especially as summer demand driving ends,” McTeague said.
McTeague said most retailers tack on about 7 or 8 cents a litre to cover their operating expenses.
“At 87.9 most gas stations can’t make a go of it when it costs them almost 90 cents to buy the gasoline wholesale,” he said.
McTeague said even with the increase, drivers need only reflect on prices over the last few years if they need to feel better about filling up.
“It’s 12 cents cheaper in Saskatoon this year than last year. 25 cents less than the year before, so 2014, and about 30 cents less than it was in 2013,” he said.
McTeague said this year’s prices are in fact the lowest they’ve been since 2010, with an average person saving somewhere between $10 and $14 per week on fuel.
McTeague said he expected gas prices to come down in coming weeks, with another brief spike expected in the fall when refiners switch to making winter-blended fuel.