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Gas prices across Canada could remain unpredictable for the foreseeable future, according to Roger McKnight, chief petroleum analyst at En-Pro International Inc.
McKnight joined The Evan Bray Show on Monday to discuss the uncertainty surrounding gas prices with guest host Brent Loucks, and explain why overseas tensions could continue to impact drivers at pumps throughout the summer.
Read more:
- Inflation jumps to 3.2% in May thanks to higher gas prices: StatCan
- ‘Very expensive summer’ ahead, as gas prices could hit $2 a litre: Petroleum analyst
- Saskatchewan drivers feeling the sting of surging gas prices
Listen to the full interview with McKnight, or read the transcript below:
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This interview has been edited for length and clarity.
BRENT LOUCKS: Are we going to see any relief in the future with gas prices?
ROGER MCKNIGHT: It’s a coin toss, really. You’re looking at the Strait of Hormuz situation, and I’m really looking at global inventories, because if the inventories keep dropping like they are, your prices start going up. They’re not going to keep going down. Crude could fall, but I think this situation right now is all the traders are looking at the global inventories of crude oil and all refined products, because they’re at dangerously low levels.
How long is it going to take to get those levels back up to a more normal level?
MCKNIGHT: I would say we’re looking at very unstable pricing situation for the balance of the year. It really depends on how the geopolitical table is going to turn. I don’t quite understand President Trump, and what he says, or what he says he’s going to do, or has done. It seems to change week to week, and that has the financial markets and the traders of crude and refined products very nervous, because they can’t deal with uncertainty. That’s the problem. I think, politically. There’s a lot of uncertainty too, both north of the border and south of the border, so it’s a very tenuous situation. I have very little confidence that a peace agreement or a ceasefire (in Iran) is going to hold for the balance of the year.
Will we continue to see price fluctuations over the course of the summer?
MCKNIGHT: It’s a bit of a mystery. It looks to me like the retail section is taking a bit of advantage of it, because the wholesale price difference is basically nothing for the prairies. When you get into the eastern part of the country, Toronto wholesale price is about eight cents lower than west of Thunder Bay, so I empathize with the consumer. I have very little answers, but I have even less confidence that this so-called ceasefire that’s supposed to last for 60 days until they come up with a final agreement is going to hold. It hasn’t held in the past, and I can’t see it holding in the future. There’s just too many variables, and too many variable political stances in this equation to make any sense.
We saw the federal gas tax reduced temporarily. Do steps like that do anything as far as the gas market is concerned?
MCKNIGHT: Psychologically, for the consumer, I guess it is, but with the excise tax elimination of 10 cents that reverses itself on Labour Day, you’re going to pay now or you’re going to pay later. If you’re going to start eliminating taxes, you’re going to start eliminating a lot of the revenue that the provinces are dependent on, and gasoline and diesel and refined product taxes are absolutely essential to run the provinces.
