VANCOUVER (NEWS 1130) – It was just a day ago that we were hearing predictions of a two-to-five cent jump in the price of gas for Metro Vancouver by midweek. Well, it turns out that may have been a little low.
Energy analyst Dan McTeague is revising his calculations after global oil prices continued their tear upward Monday, now predicting the price for a litre of regular will spike by seven cents on Wednesday, with diesel increasing by 11 cents per litre.
“What’s been driving this up, of course, is what happened in Saudi Arabia — the attack forcing half of their oil production offline — and that caused markets to react violently,” he tells NEWS 1130. The price for oil jumped by over $8 per barrel for West Texas Intermediate Monday and almost $8.50 for Brent Crude.
“It’s really a response to a potential supply crunch for oil and until Saudi Arabia gets back on its feet or the potential for an escalation of U.S. military action proposed by President Trump goes away, the likelihood is that we could see things get even dicier. That’s one of the reasons prices have gone up as dramatically as they have.”
McTeague says if you see gas stations selling regular at $1.509 per litre Tuesday, be aware it will likely be $1.579 by Wednesday morning.
“Save yourself seven cents a litre or five or six bucks per fill-up and take advantage of it while you can,” he advises.
And McTeague suggests this is not a situation where refinery capacity is an issue for Lower Mainland gas prices.
“It’s not refineries, it’s oil. Even if you had five or 15 more refineries, there wouldn’t be a material change in the price of gasoline. However, Canada could be selling a lot more oil and taking advantage of a $63 barrel versus a $50 barrel if it had pipelines,” he argues.
“At the moment, the world needs more oil. It has plenty of gasoline, but it could run short if we don’t get enough oil into the markets. When you lose five per cent of the global total produced — and that’s what has happened with Saudi Arabia — we could be looking at a severe shortage on the oil side which causes diesel, gasoline, jet fuel and economically critical petrochemicals to rise dramatically,” he adds.
“It is very much a shocking situation overall, but it is based on the very real concern of hiking tensions in a part of the world that still produces a lot of oil for all of us.”
-With files from Ash Kelly