Gasoline prices went up Wednesday evening in Portage this past week, and we're not alone. Everyone in Western Canada saw an increased net $.08 to $0.10 a litre. It's been even higher in Saskatchewan, Alberta and BC. where a $.10 increase occurred. 

Canadians for Affordable Energy president Dan McTeague explains what we can... (ahem...) look forward to.

"There may, in fact, be another $.02 increase, depending on what happens to markets, over the next couple of days," says McTeague. "All of our markets here in Western Canada are tied directly to the spot market for gasoline and diesel prices out of the US. The US Midwest, with the ongoing and continued shutdown of the large refinery, the BP refinery, known as the Whiting plant just south of Chicago, is continuing to have quite a drag on supply. And that's really what's primarily pushing up prices."

He notes the plant's been shut down for over a month now due to an accident that closed part of its catalyst portion.

"Basically, it's an important part of the plant's processing and, as a result, it hasn't been able to produce much fuel. It imports, or brings in and uses, about 400,000 barrels of oil a day. That probably represents about 15 per cent of the total gasoline and diesel needs for all the US Midwest. So, anything, really, north of Texas and from Washington State, all the way back to New York, is the area that's that's affected."

McTeague says this is having an impact on gasoline spot prices north of the border in our country. This means that the United States matters, and this is what happens when you have a very large plant like that one that's been unable to really get up and running despite the problems and setbacks that it had well over a month ago. 

It's a catching-up issue where we're now paying for that shutdown. 

"Spot prices continue to rise," continues McTeague. "We're looking at a continuation in those spot prices. It looks like they're again up another $.03 to $.04 a litre. Should this continue by, say, Monday or Tuesday, it's likely that the dollar 133.9 that has us a little surprised could be a 138.9. At this point, it's just a matter of how long and how much longer the plant the refinery in Chicago remains offline. As long as it does, it creates a bit of a crimp in supply and that's why the strong demand exists right now across, not just the US Midwest, but here in Western Canada, that you can expect those prices to reflect that much higher premium."

McTeague drops the news that this is part of the reason that we'll see 2024 to likely be far more expensive for fuel than 2023.  

He adds despite the move by the government to temporarily suspend gas taxes $.09 cents a litre, by the time they're restored in June, we'll still notice that prices are uncomfortably higher than they were this time last year. 

"My estimation is anywhere from $.08 to $.12 a litre higher, despite what the government's done to help people," adds McTeague. 

Regarding the BP plant shutdown, they're still working there. 

"The electricians, steam fitters, and journeyman are still working around the clock. Mum's the word for now. A lot of the refineries in the US, and to a lesser extent, Canada, are going through seasonal maintenance, getting ready for and anticipating the summer driving season; summer demand. And many of those refineries are coming out of maintenance. That creates a little bit of an incentive for prices to drop a little bit, but we're not out of the woods yet. That's only because, while we might see more refined product coming out from refineries that have been shut down or going through this seasonal maintenance, we also see that that puts higher demand on oil. That means higher prices, ultimately. It's kind of like a no-win situation."

Now that February's behind us, by the end of March, on the Easter long weekend, we're going to see an increase of about 3.5 cents a litre, and another increase in the federal carbon tax.

"That will be very quickly followed up by the switch-over from winter to summer blends of gasoline on the 15th of April," continues McTeague. "Pencil in another $.06, maybe even $.07 a litre for that. And then look at what's happening geopolitically, and of course, weakness in the Canadian dollar. All of these things are really going to conspire to pushing up prices, probably anywhere from $.08 to $.12 a litre on average. The gift that the government gave to drivers of the $0.09 discount ends on June 1st. So, it's going to be a very expensive summer."

McTeague shares the bad news that we'll likely go back to high prices that we haven't seen since 2021 or early 2022, and maybe even back to 2018-2019. 

"The only difference being that you're now paying a $.17 - $.18 carbon tax with GST," adds McTeague. "I'm going to be watching between now and Monday because the $1.33, the $.08 increase, did not take into account Wednesday's increase on US markets of about $0.05 a gallon, and Thursday it's up $.07 - $.08 a gallon. You put those two together - $.12 and a weaker Canadian dollar; that works out to about $.03 to $.04 a litre. We could see a scenario developed where, by this time next week, we could be looking at $1.37 or $1.38 for a litre of gasoline."
 
Gas is not going down just yet. McTeague explains all eyes will be focused on when that all-important refinery south of Chicago in Indiana gets up and running again.

"By the way, that 440,000 barrels of oil that it uses every day to serve that critical market, I would say about 60 per cent of it comes from Canada," notes McTeague. "280,000 barrels out of that 440,000 comes from your neighbours in Saskatchewan, and to a large extent, Alberta."