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Oil prices have fallen — so why is the price of gasoline skyrocketing across Canada?

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Oil prices per barrel have fallen about 20% over the past month. This is a situation that typically results in a price drop comparable to what consumers see when refueling their cars. However, the imbalance between supply and demand has pushed pump prices in the opposite direction, and the impact on Canadian drivers is dramatic.

Gasoline prices soared in parts of the country on Thursday, with average prices jumping as much as 20 cents a liter in Thunder Bay, and higher prices in Edmonton and Calgary, on a day when the benchmark price for a barrel of oil fell about $1. did. Friday was a similar amount, but oil prices dropped another 50 cents.

Pain is now felt most acutely in British Columbia, where the average price per liter is Gasoline is $2.39This is the highest average price on record in any North American jurisdiction.

There are many costs drivers pay to pump, but the main cause in BC right now is the closure of one of the region’s major refineries, reducing the supply of petrol. However, demand for drivers remains steady, and the price of what’s available has skyrocketed.

Refinery closure

The Phillips 66 refinery in Ferndale, Wash., closed for maintenance earlier this month, taking about 65,000 barrels worth of gasoline off line per day.

“B.C. and Vancouver import every last barrel of gasoline and diesel from Canada. [that] Vijay Muralidharan, Energy Analyst at R Cube Economic Consulting Inc. said:

According to the U.S. Energy Information Administration, the North American gasoline market is broadly divided into five zones known as the Defense District Petroleum Administrations (PADDs). Supply is limited, but demand is strong in his PADD-5 district, which includes British Columbia, so fuel from four other he regions is moving to meet that demand, and everywhere prices are falling. It is rising.

“We have to compete for limited barrels,” Muralidharan said. “So whoever paid the higher price wins the product.”

Washington state refineries aren’t the only ones offline right now. These widespread closures are also impacting prices across the country, as the Toledo, Ohio refinery is closed due to fire and is not expected to return to full capacity until 2023.

“In my career, I’ve never seen a wider range of price action,” said GasBuddy.com analyst Patrick de Haan.

“Many unforeseen refinery disruptions, including fires and scheduled maintenance, all appeared to occur within a short period of time, sending wholesale gas prices skyrocketing in regions of the West Coast, Great Lakes and Plains states. Departments expect prices to rise another 25 to 75 cents a gallon or more until the issue is resolved.” he said this week.

That comes when the North American crude benchmark, known as the West Texas Intermediate, has fallen from $96 a barrel at the end of August to $76 at some point this week. recession. The paradox of cheap oil and expensive gasoline synergies has rippled across the United States and extends north of the border.

‘The market is tight’

Prices in oil-rich Alberta have always been lower than elsewhere, but in the province’s two largest cities prices fell from under $1.50 a liter on Thursday to $1.60 a liter on Friday. jumped above.

Alberta prices are up about 10% last week compared to about 20% in BC. Thunder Bay’s rise is directly impacted because “most gasoline reaches Thunder Bay via pipeline directly from Edmonton.” Energy consultancy Kalibrate. “In terms of the amount of price swings that happened in Thunder Bay, it was right where it should be.”

He also cites another reason for the surge in gas prices. supply of ethanol. Many US states and provinces require retail gasoline to be blended with 5-15% ethanol, and ethanol supplies fell 7% last week. “If that continues, mixed components will rise as well,” he said.

He doesn’t expect drivers to see any easing until after the Thanksgiving long weekend, but the market is still vulnerable to a slight decline on the supply side. It’s very tight on capacity,” he said.

Vancouver resident Joel Scott says he is considering buying an electric car because of the environmental and economic costs of using so much gasoline. (CBC)

On the streets of Vancouver on Thursday, Daniel Mihajchuk said it’s hard to ignore the price drivers pay for pumping. told to

Driver Joel Scott said he needed a pickup truck for work, but hopes to purchase an electric version as soon as he can afford it. “We need to drive less,” he said, noting that the reason wasn’t just financial. said.

“Climate change, I totally see that we are affected,” he said.

Hurricanes Fiona and Ian appear to have bypassed most of the oil infrastructure, but gasoline delivery and supplies still feel uncertain, said Christine Darvels, CAA’s senior director of public affairs.

“Storms can affect gas prices,” she said. “Where the gas is coming from varies slightly across the country, so you may be feeling a little more gas in one state than another.”

Watch | Demand for Electric Vehicles Soars:

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Traditional automakers and start-ups are accelerating plans for electric vehicles as demand surges due to higher gas prices and US President Joe Biden announced huge investments in building electric car chargers.

The deadline for the petrol tax cut is approaching

When prices soared earlier this year, many states moved to offer consumers some peace of mind by temporarily lowering gas taxes. These cuts are set to end soon, which is another factor pushing prices higher.

Alberta’s fuel tax is normally 13 cents per liter, but the province cut that figure to zero during the crisis earlier this year. But starting tomorrow, the state will reintroduce a tax of 4.5 cents per liter.

Ontario has lowered its gas tax from 14.7 cents on July 1st to 9 cents per liter and will end on December 31st.

Victor Valance, senior vice president of natural resources and pipelines at DBRS Morningstar, said currency issues were also a factor. Crude oil is priced in US dollars, and like most other currencies, the Looney has fallen against the US dollar over the course of several weeks.

“People are being squeezed everywhere,” he said.

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