Drivers are feeling gas pains as the price at the pumps is jumping in much of the country.
Pumps in the Toronto area saw prices rise 3.6¢ a litre overnight, with the price of regular gas at $1.21 a litre at most stations in and around the city. The average price in Ontario is about $1.19 per litre.
The national average at the pumps is about $1.14, according to website GasBuddy.com, which monitors prices across the country.
In British Columbia and Saskatchewan, the prices are also rising and hit about $1.19 and $1.11 overnight, respectively.
The average price at the pumps has remained stable in Alberta, Quebec, Nova Scotia, Prince Edward Island and Newfoundland over the last 36 hours.
Prices are actually falling in Manitoba and New Brunswick, to an average of about $1.06 and $1.10 per litre, respectively.
The shifting prices are being blamed on fears Libyan oil and gas exports are on the verge of collapse amid unrest in the country.
But Libya is only responsible for about 2% of the world’s oil production. The country far from the world’s largest oil supplier, and most oil it produces goes to Europe, not North America, said Michael Ervin, an Alberta-based consultant with Kent Marketing Services.
With a huge inventory of oil in North America, prices here should remain relatively stable, he said.
But a worried Europe is starting to eye and buy less expensive oil produced in North America, driving its price up, he said.
“North American crude oil prices have started to rise as a result of that crude oil making its way to pipelines and onto ships to satisfy the perceived shortfall of crude oil to Europe as a result of the events taking place in Libya,” Ervin said.
Disruption stemming from the revolt in the world’s No. 12 exporter has cut at least 400,000 barrels per day (bpd) of the country’s 1.6-million bpd output, according to analysts. Some European analysts are suggesting the Libyan output may have actually fallen by as much as 1.2 million bpd.
Brent crude on Thursday continued to rise, spiking by about $8.54, to peak at $119.79 per barrel.
Major banks joined the chorus of calls on Thursday for Organization of the Petroleum Exporting Countries (OPEC) to act quickly on fears the strong oil prices could derail the world’s fragile economic recovery.
The price of oil futures – the oil to be delivered in April – have reached, and exceeded, $100 per barrel for the first time since October 2008, as speculators count on growing unrest in the Mideast and North Africa to cut supplies even further in the coming weeks.
The cuts in Libyan oil output represent the first disruption to supply as a direct result of protests that have swept through the oil-producing regions of north Africa and the Middle East.
The concern for oil markets is how unrest might affect Saudi Arabia, which not only pumps around 10% of the world’s oil but is also the only holder of significant spare crude production capacity that can be used to plug outages.
The price of oil futures could bring more trouble at Canadian pumps this spring, Ervin said.
Gasoline is made from crude oil. So when refineries take in crude oil at a higher price, they are going to attempt to sell that a higher wholesale price, he said. But there are many occasions when crude prices have gone up and gasoline prices have not.
A high inventory of gasoline will keep the prices down, Ervin said.
“At times when demand is low relative to supply, that tends to keeps the wholesale prices depressed even when crude prices are going up,” he said.
-With files from Randy Richmond and Reuters
(Michael Ervin, Vice President of Consulting Services with Kent Group Ltd., gives his comments regarding the increase in oil prices and current tensions in the Middle East. http://www.lfpress.com/news/canada/2011/02/24/17393991.html)