High oil prices, global bottlenecks driving up the price of fuel

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If you’ve had to go fill your fuel tank recently you’ve likely noticed a significant cost run-up.

Patrick De Haan, head of petroleum analysis at GasBuddy, says on average the price of gas is higher than it has ever been, at an average of $1.45/L across the country.

There are numerous reasons for this, but one of the biggest factors is the combination of higher oil prices — the highest in eight years —  and energy shortages overseas.

“A shortage of coal in China and a shortage of natural gas in Europe has supported the price of crude oil, and OPEC (Organization of the Petroleum Exporting Countries) has been reluctant to increase production more significantly than what it had already had planned in July and that has the price of oil continuing to surge, and that is pulling gas prices higher across the country,” De Haan explains.

We can look at the why of these prices, which is crucial, but those of us headed to the gas pumps are also asking: how long will this last?

De Haan says it could be at least several months until we see some relief.

“There are a lot of bottlenecks that have been induced by COVID. Shipping bottlenecks, logistical challenges, labour challenges. These are all factoring in to some lumpiness in the economy and when it comes to oil supply. In addition, OPEC is increasing production every month until 2022,” he explains. “So that may help in the months ahead as OPEC continues to increase production, but for now it doesn’t look like we’re going to get rid of these problems overnight so gas prices may continue to see some pressure.” (Story continues below interview)

There’s interplay between the gas and diesel markets, as well. While we are coming off seasonal highs in gasoline, we are heading into high time for diesel. And as De Haan notes, diesel is the fuel that powers the economies, especially when looking at heavy machinery, ships, and trucks. Diesel, too, has been the highest on average that its been for the last seven years.

When it comes to recommendations for consumers, De Haan says the best thing you can do right now is to pay attention — because one gas station could greatly differ from the next.

“It seems obvious, but certainly there’s a lot of potential savings with shopping around. Even looking across Canada, prices vary in some areas by as little as five cents a litre to as much as 25 cents a litre amongst provinces. So if you’re out and about, make sure you’re at the station that’s charging the least amount to certainly save some money this winter,” he advises.

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