Saskatchewan gas prices drop as much as 20 cents a litre, but analyst warns relief could be brief

Gas prices are falling across Saskatchewan, but an analyst warns the relief at the pumps could be short-lived.

Some stations in the province have cut their prices by between 10 and 20 cents a litre, with particularly large declines reported in Saskatoon. Regina drivers are also paying less than they were last weekend.

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• Gas prices expected to remain unpredictable amid global tensions, analyst warns
• Fuel uncertainty: Why drivers should expect more fluctuation at the pumps

GasBuddy listed Saskatchewan’s average at about $1.70 a litre on Thursday, down about four cents from one week earlier. However, individual stations have been making larger adjustments.

Patrick De Haan, GasBuddy’s head of petroleum analysis, said the decline followed a sharp drop in global oil prices earlier this week.

“Oil prices fell Monday, Tuesday and Wednesday, significantly, and that’s opened up the door, at least for the moment, for gas prices to fall,” De Haan said.

He said oil markets reacted after U.S. President Donald Trump suggested an agreement could be close that would allow more shipping through the Strait of Hormuz.

The strait is a major shipping route for the global energy industry, and disruptions there have reduced the amount of oil reaching international markets.

“The drops that we’re seeing and will see for the next 24 to 48 hours are all courtesy of the potential for a new deal to reopen the strait,” De Haan said.

Although prices at some Saskatchewan stations have fallen sharply, De Haan said not every retailer changes its price at the same time or by the same amount.

“Some stations may have gone down, as you mentioned, 10 to 20 cents a litre,” he said. “Some go down much slower, a few cents a litre, as their replacement costs go down. So, it’s really all over the map.”

The provincial average can therefore move more slowly than prices posted at individual stations.

While drivers will welcome the current decline, De Haan said oil prices had already begun climbing again Thursday because an agreement to reopen the strait had not been finalized.

“If the strait doesn’t reopen soon, the market is likely to continue to see oil prices going back up,” he said.

That could eventually reverse some of the savings appearing at Saskatchewan pumps.

De Haan said fuel prices would typically be influenced by factors such as supply, demand and seasonal driving patterns. This time, however, geopolitical events are creating sudden and unpredictable swings.

“Instead of supply and demand resulting in price changes, the situation that’s driving the ups and downs is strictly geopolitical,” he said.

Uncertainty surrounding the United States and Iran is only one part of the equation. De Haan said Ukrainian attacks on Russian oil refineries are also placing pressure on global supplies of refined fuels.

Russia is a major exporter of diesel fuel, but disruptions to its refining industry have led the country to restrict exports, according to De Haan.

“It’s not just a story about what’s ongoing with the Strait of Hormuz and the U.S. and Iran,” he said. “Increasingly, it’s also been a story about Ukraine attacking Russian oil refining capacity.”

De Haan said Canadian producers participate in a global market and can sell their oil wherever buyers are willing to pay the highest price.

“Canada is a country that trades globally. Everyone is,” he said. “As long as you’re connected to other countries globally, you’re going to feel the impact.”

He said Canadian companies both import and export energy products, making it impossible to fully separate domestic prices from changes in the international market.

“When there’s less oil supply, there are more desperate buyers overseas that are offering producers a higher price,” De Haan said. “Canadian oil producers, like American oil producers, will send the products wherever they go.”

For drivers trying to determine whether prices will continue falling, De Haan said there is no dependable forecast under the current conditions.

“It makes it rather frustrating because instead of looking at the numbers and watching fundamentals dictate prices, this is just vastly unpredictable,” he said.

For now, Saskatchewan drivers can take advantage of lower prices at many stations. But De Haan cautioned that without progress overseas, the decline could end as quickly as it began.

“We’ve never seen the amount of volatility that we’re currently seeing,” he said.