TORONTO – The rising price of crude oil, pushed by turmoil in Libya and the Middle East, is driving prices at the gas pump higher.
And as spring approaches and more people hit the road, driving could get even more expensive.
Michael Ervin of energy consulting firm Kent Group Ltd. said Tuesday that the wholesale price of gasoline in Canada is up about a nickel per litre from a week ago.
When it goes up that amount, retailers have no choice but to pass that along pretty quickly because in many cases the retail margin is only in the order of five or seven cents per litre,” Ervin said.
He noted that as the weather improves and people drive more, the retail prices will rise further if crude stays high.
“That hasn’t kicked in yet. We’re just seeing, fundamentally, changes at the crude level driving the wholesale price,” Ervin said.
The average price at the pump for unleaded in Canada was $1.206 per litre on Tuesday, up from $1.152 per litre the previous week according to Kent Group Ltd.
One of the biggest increases in Canada was in St. Catharines, Ont., where the price jumped 11.6 cents per litre to $1.219.
Quebec was the most expensive region in the country, with the price averaging $1.269 per litre, up from $1.179 a week earlier. The lowest average price was in Western Canada at $1.179, up from $1.129.
The price of oil has traded solidly above US$100 a barrel in recent days as fighting has escalated in Libya, an OPEC member and major oil exporter to Europe.
A North American benchmark crude known as West Texas Intermediate settled at US102.23 per barrel on Tuesday — the highest close since September 2008. Brent crude, another benchmark that’s used widely outside of North America, closed at US$116.35 a barrel, the highest settlement since August 2008.
Libya has been caught in a civil war that has shut down oil production in many parts of the north African country.
The International Energy Agency said Wednesday that between 850,000 and one million barrels per day of Libyan production were shut in. That’s up from its previous estimate of between 500,000 and 750,000 barrels per day.
In the U.S., the Energy Information Administration reported that oil supplies in the U.S. fell by 400,000 barrels and gasoline inventories dropped by 3.6 million barrels last week as petroleum demand increased.
Supplies dropped as refineries flushed out winter fuel blends to make in preparation for new formulas required during the summer. Despite the drop, the U.S. is still sitting on a relatively large surplus in both crude and gasoline when compared with previous years.
— With files from The Associated Press