As summer approaches, Canadians may want to hit the road to enjoy the nice weather. but will gas prices Agreed to plan a road trip?
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website analytics gasbuddy is warning that while petrol prices have declined over the past week, recent decisions to cut oil supplies could put pressure on prices.
“(Organization of the Petroleum Exporting Countries) OPEC+ agreed on Sunday to cut additional production, while Saudi Arabia is going above and beyond July output,” Patrick de Haan, head of petroleum analysis at GasBuddy, said in a blog post. is and is making the cut.”
“As a result, oil prices are likely to see upward pressure as global supplies, which remain tight, promise to tighten even further.”
Gas prices have come down from a record high last year, when inflation peaked and demand was boosted after two years of COVID-19 restrictions.
Demand has been low this year, however, due to short supply, prices have not increased.
The average price in Canada is currently about $1.60 a litre, down about 50 cents by 2022. However, the prices are still above the average that was seen before inflation hit, which De Haan told Global News was no more than $1.45 a litre.
“It’s not a full return to normal,” he said. “One of the reasons why prices haven’t really increased much this year is simply the lack of a return to normal consumption.”
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As for what Canadians can expect in the summer, de Haan predicts prices between $1.45 and $1.80 per liter – but warns that avoiding price increases is a delicate balance.
Saudi Arabia announced it would cut its oil production by 1 million barrels per day starting in July as international benchmark Brent crude fell as low as $75 a barrel in recent days. The country expects the price to rise to $80.90 a barrel, on which its economy depends.
Meanwhile, OPEC+ producers recently agreed to extend earlier production cuts into next year.
While demand has been lower than supply, de Haan said too much stimulus for the economy could cause prices to skyrocket due to low supply.
Fortunately, the risk of that happening this year is slim, he said, as interest rates are expected to remain stable or go up. He said that if monetary policies soften, the impact of the shortfall in supply could be felt next year.
“OPEC is playing a dangerous game,” de Haan said. “It wants to raise prices in the short term, but in the long term, it runs the risk of that policy getting out of control.”
De Haan also warned that hurricane season, which typically falls in July and August, could also be a factor in gas prices and poses a risk of cost increases.
Meanwhile, some Canadians are planning road trips this summer to take advantage of lower gas prices this year than last year, although they are bracing for higher prices elsewhere due to inflation.
Ross Cruz Bieder told Global News he plans to travel to Tobermory in Ontario this summer, but may cut back on other expenses, such as coffee, to save some money.
“(Gas prices) are going to be a factor this summer,” he said.
— With files from The Associated Press and Global News’ Anne Gaviola.
© 2023 Global News, a division of Corus Entertainment Inc.