Gas prices to spike to seven-year high this week

Analyst Dan McTeague says GTA gas prices to top June 2014’s high of $143.9 … and could crack $1.50 by November

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And so begins the winter of our discontent.

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That’s what’s in analyst Dan McTeague’s crystal ball as gas prices soar to their highest point  since 2014 — with 142.9 cents per litre expected at the pumps by Wednesday.

“It’s that old proverbial ‘perfect storm,’ but much of it is deliberate,” he said.

“There’s nothing stopping these prices from pushing to $1.50 per litre in the next few weeks.”

Tuesday proved a volatile day for the energy markets with natural gas prices spiking nearly 15% in anticipation of the winter heating season, McTeague said.

The last time gas prices were this high, McTeague said, was on June 21, 2014 when a litre of regular unleaded sold for 143.9.

“At that time, oil was trading for $109 per barrel,” he said, referring to West Texas Intermediate (WTI) — the benchmark used to establish Canadian gas prices.

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“It’s now, it’s just $79.80, so the question is how come?”

That, he said, is largely due to taxes, not to mention the weak Canadian dollar.

“It’s only 125 pennies to buy a U.S. dollar,” he said. “When we last saw these prices, the Canadian dollar was more like $1.10.

“We’re not selling enough oil, and the oil that we are selling is shut in, thanks to pipeline blockages.”

These factors will mean gas prices are headed in an uncomfortably upward trajectory.

And with portents on energy futures eyeing WTI’s return to $100 per barrel, prices could be on the rise well into 2022.

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But what does $100-per-barrel oil mean for Canadian gas prices?

“Given the weakness of the Canadian dollar, and because we block pipelines in this country as policy, that would add almost immediately 22 to 23 cents per litre,” McTeague said.

That doesn’t just translate to bigger pain at the pumps, but also higher transportation costs across all sectors passed on to consumers.

“You can fool around with gasoline and say ‘hey, it’s for big fat cats that want to drive around in their vehicles,’ but what do you about with diesel for transit, or natural gas to keep the economy humming along?” he said.

bpassifiume@postmedia.com
On Twitter: @bryanpassifiume

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