Gas prices to significantly drop at midnight amid tumbling price of oil

Ontario drivers are about to get some more relief in the form of another significant drop in gas prices.

Roger McKnight, Chief Petroleum Analyst at En-Pro, tells CityNews the price at the pumps will fall eight cents at midnight, reaching 177.9 cents/litre at most GTA stations.

The drop will bring the price just one cent shy of June’s low of 176.9 cents/litre. That price, the lowest since April, was hit last week after prices plunged 15 cents in two days.

Wednesday saw a slight increase overnight, with the average price currently sitting at 185.9 cents/litre.

Historical gas prices for June

Prices in the GTA peaked at 214.9 cents/litre in June, and the lowest price this year was in February, when it was costing drivers 161.9 cents/litre at most stations.

The cheaper gas prices can be attributed to a drop in the price of oil and the speculation of an economic recession on the way. Oil tumbled eight per cent on Tuesday, down $8.25 to just over $95.

The falling price of oil is due to renewed COVID-19 lockdowns in China and ongoing concerns about an economic recession.

McKnight says the drop came despite gasoline inventories still being low, pointing to the shift coming largely from a change in investor sentiment.

“Someone on Wall Street said let’s bang a futures down, the futures market on New York Harbour, because they think we’re heading for a recession here and that’s just gonna erode demand severely. People won’t need much gasoline because they won’t be going anywhere, so that’s why the prices came down. It’s a complete turn of the tables if you ask me,” he says.

The Bank of Canada raised its key interest rate by a full percentage point to 2.50 per cent on Wednesday, citing inflationary pressures among other factors. The rate hike of 100 basis points is the largest single hike since August 1998.

“Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report, and will likely remain around eight per cent in the next few months,” the bank noted in its statement.

The Ford government implemented a cut of the gas tax by 5.7 cents per litre in Ontario on July 1, and prices at the pump dropped 11 cents on that day.