Gas is going up when the Gas Tax increase takes place this coming Monday, April 1, and that's not the only increase in gasoline prices that we're going to see.

Dan McTeague is President of Canadians for Affordable Energy and also runs the Gas Prediction sites for many cities across Canada, gaswizard.ca. and says gasoline prices have remained relatively high in the markets. He notes much of this is a leftover reaction of what happened south of the border in the United States with a division and area that's pretty influential for all Midwest fuel. That was the shutdown of the BP refinery near Chicago for about six or seven weeks, which is back up and running now. 

"A lot of refineries are trying to play catch up with very strong demand, and that's likely to lead to even higher prices than what we're paying today, despite the provincial government dropping taxes by about $0.14 a litre," says McTeague. "That is the provincial portion of the tax."

He explains energy prices are also going up April 1 by 3.5 cents a litre; 3.3 plus GST. And if that weren't enough, he says, the switch-over from winter to summer gasoline occurs at just about the same time a week or so later.

"All in all, anybody who thinks they can get gasoline for $1.30 better take advantage of it now because $1.50 isn't very far down the road."

McTeague notes other costs that are mounted atop already rising prices. Following the BP refinery breakdown, further issues are playing a part.

"Other refineries have also gone through what's known as spring maintenance," continues McTeague. "They've gone through turn-around, and that's put a bit of a crimp in supply. It means that prices have, in fact, gone up. A lot of people were upset on the weekend in neighbouring Saskatchewan where prices there have shot up to about $1.48 a litre or $1.49. You're starting to see the long-term effects. The BP plant going down was not expected. It created a long-term impact in terms of a shortage of supply, and other refineries are not catching up just yet. So, that's why we're seeing a pretty significant rise in wholesale prices."

He explains that you can get a perspective on this by realizing that Manitoba's wholesale price before tax running is at about the $0.97 a litre area. Back at the beginning of the year, the government had taken off the provincial sales tax. Gasoline was still pushing around into the 68 to 71-cent range. 

"So, it's gone up substantially about $0.20 a litre net since then, and that's primarily a response to the fact that taking a position of ignoring fundamentals, it really has a kind of a consequence. If you don't look at the client demand, you might wind up short. That's exactly what's happened throughout much of the US Midwest, and that's having a pretty dramatic impact here on, us all in Western Canada, from Thunder Bay all the way to the BC Interior."

McTeague says ignoring the fundamentals of supply and demand has been a market problem for the past little while. He notes they've been finding excuses to ignore supply and demand, and adds that's a real concern. He says the evidence is now being seen when markets spend too much time fretting over things that have nothing to do with supply and demand, but have everything to do with headline news.

"Markets don't base themselves on headlines," continues McTeague. "Commodities trade based on supply and demand. That's how prices form. But if you start distorting it or you have a group of people out there -- their hedge funds, artificial investors and day-traders are playing this sort of silly game of saying, 'Oh well, interest rates are going to have a demand problem at some point down the road,' and it doesn't and it turns out, that demand is still very robust and very strong in places that count, like the United States and places like China, then you wind up, unfortunately, for Canadians, having to pay the freight."

Related Stories