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Long weekend and beyond: Gas prices going up, and staying up, says analyst

A man fills up his truck with gas in Toronto, on April 1, 2019. Statistics Canada says retail sales edged up 0.1 per cent in April to $51.5 billion in April, boosted by higher prices for gasoline and new car sales. THE CANADIAN PRESS/Christopher Katsarov

Gas prices across Canada could rise to a staggering national average of $1.30 over the weekend and remain there for the foreseeable future, said former MPP and Senior Petroleum Analyst at GasBuddy, Dan McTeague.

And though he suspects people may be quick to blame the spike on the long weekend, he said that’s got nothing to with it.

“This is directly related to what’s happening on the markets and tightness in supply,” he explained.

A tightness in supply that McTeague said is largely due to a fire that occurred last week at the world’s largest oil refinery, Philadelphia Energy Solutions (PES).

The northeast U.S. refinery, which processes 335,000 barrels of oil per day, is currently closed and likely to be permanently shut down, he said.

A move that McTeague predicts will lead to much higher oil prices going forward.

And while gas prices have increased gradually across the country, given the proximity to PES, eastern Canada is feeling it the most, with an increase of almost seven cents per litre over the past week, he said.

He thinks gas prices in the GTA and Ontario will reach almost $1.27 per litre, at least, by Friday.

“The reality is that for all of us here in eastern Canada, it does mean a little bit more tightness in supply, which means higher prices going forward,” McTeague said.

He also referred to The Department of Energy’s inventory report, released this morning, that shows a massive draw down in oil supplies by about 12.8 million barrels and 8 cents a gallon.

This means that by Friday there will be a price increase upwards of three cents per litre, on top of tomorrow’s gas price increase of one cent per litre, he said.

He added that meteorological factors, the weak Canadian dollar and the potential resolution of the U.S.-China trade issue are also to blame.

“The current Canadian dollar, at $1.31 for every U.S. dollar, adds about 16 or 17 cents a litre to the price of gasoline, and that’s a conservative estimate,” McTeague explained.

And though there was a bit of a break in rising prices due to the potential trade-war between China and the U.S., if there’s positive news between the two countries at this weekend’s G20, it would mean even higher gas prices, he said.

With the upcoming federal election, McTeague predicts the issue of energy prices will be top of mind given their overarching impact on affordability and cost of living.

“The party’s over and now comes the time to pay the piper,” he said.