Montrealers dinged at pumps
Spike in the price
of gas just a blip? The sudden jump to $1.44 a litre is likely a sign of temporary market “flux” rather than an omen that summer prices will soar, experts say.
Tuesday’s spike in gas prices to $1.44 a litre at some Montreal-area pumps is likely a temporary blip, an industry analyst says.
And it does not point to soaring gas prices as Quebecers anticipate the spring and summer driving season, Michael Ervin said.
“I don’t think we are going to see a seasonal rise in gasoline prices of any significant magnitude,” Ervin said in a telephone interview from the Calgary offices of MJ Ervin & Associates Inc.
“Across North America there is quite a surplus of refinery capacity given the soft U.S. economy and gasoline demand ... is lower than what we have seen in previous years,” he said.
Local motorists were zapped with a particularly nasty jolt at gas pumps on Montreal Island Tuesday morning, with fill-ups costing in the range of $1.44 a litre for regular gas.
That compares with prevailing prices Monday evening of $1.26 per litre and slightly higher.
The increase amounts to as much as 18 cents a litre.
According to Ervin, whose consultancy tracks gasoline prices across Canada, the $1.44-per-litre price in Montreal represents “about a 10-cent-per-litre markup” from wholesale to retail prices.
“Historically (that retail markup in Montreal) averages about seven cents a litre,” he said.
The price of crude oil has been climbing, driven largely by the potential for conflict with Iran and the possible blockage of the Strait of Hormuz, a crucial tanker route.
Reuters reported that oil prices fell a second day on Tuesday as the threat to demand from high prices trumped fears of supply disruptions and investors booked profits after the recent rally in prices.
Brent crude oil – the yardstick for oil prices in eastern Canada – fell $2.62 to settle at $121.55 U.S. a barrel for April delivery.
Pointing to the international uncertainty over the Iran situation, Ervin said that it’s not unusual to see the market in a “state of flux” until the situation settles.
“It would not surprise me to see retail prices (in Montreal) stabilize at somewhat lower than $1.44,” he said.
A spokesperson for the Canadian Petroleum Products Institute, a group that represents the country’s major oil companies, said the strong Canadian dollar is helping to offset the rising price of crude.
The high-demand driving season in Quebec usually begins in late April to May.
Institute vice-president Carol Montreuil noted that gas prices hit a high of $1.49 a litre at the end of June 2008.
“We are approaching that level ... but we are very early in the (driving) season for that to take place which points” to other factors, notably concern over Iran, he said.
According to a consumer-reporting site that monitors pump prices in the Montreal region, the average for a litre of unleaded gas in the region had jumped to more than $1.43 a litre Tuesday morning, vs. $1.30 a week earlier and $1.28 a year ago.
The Gasoline Watch website maintained by CAA-Quebec was pegging the “realistic price” of regular gas in the Montreal area Tuesday morning at $1.40 a litre, at self-serve stations.
What some would readily describe as a hosing at the gas pumps represents a familiar feeling for Quebecers.
An update released at the start of February 2012 by CAA reported a “20-percent average increase in the pump price per litre paid by consumers in Montreal, Quebec City and Sherbrooke in 2011 compared to the previous year.”
“In those three cities, motorists had to shell out an average of 20 cents more for every litre of gasoline they purchased compared to 2010,” it continued:
“That translated into a $450 jump in the gas bill for the owner of a Dodge Caravan, and a $310 hike for the driver of a Honda Civic, assuming an annual distance travelled of 20,000 kilometres”