Regular gasoline prices are expected to spike by eight cents tomorrow to $1.93 per litres in Vancouver, in response to the war in Ukraine and spiking global oil prices, according to GasWizard.
Dan McTeague, president of Canadians for Affordable Energy, said there could be another two-cent rise Friday, and warns gasoline prices in Vancouver could be close to $2 per litre by the weekend.
Russia’s invasion of Ukraine has roiled commodity markets, especially oil. West Texas Intermediate oil pushed past US$110 per barrel this morning, and Western Canadian Select (WCS) is at US$89 per barrel.
The war in Ukraine has forced Scotiabank Global Economics to revise its January projections for key commodities.
“Oil has been the most obvious and immediate beneficiary of the Russia-Ukraine conflict, and we now expect much stronger crude values this year with heightened volatility in the near-term,” Scotiabank says in an update to its January outlook.
The impact of sanctions against Russia – a major producer and exporter of oil, natural gas, wheat, lumber and potash – will add inflationary pressure through higher commodity prices, particularly oil.
“With sanctions in place and no end to this conflict in sight, our January 2022 forecasts of 70 USD/bbl WTI and 73 USD/bbl Brent in H1-2022 are no longer feasible,” Scotiabank says.
Scotiabank notes that WCS hit US$80 per barrel for the first time since 2014 a week ago. It has since risen another $9 per barrel.
Vancouver is, of course, not alone in experiencing high gas prices. Gas prices are soaring everywhere, though Vancouver maintains its position of having some of the highest gasoline prices in North America.
Montreal has the next highest prices in Canada. GasWizard predicts gasoline in Montreal will hit $1.80 per litre tomorrow.
McTeague says it’s no mystery why gasoline prices are higher than anywhere else in Canada – it has the highest taxes on gasoline, including what he calls a hidden tax in the form of B.C. low carbon fuel standard.
He has calculated that the low carbon fuel standard adds $0.12 to $0.13 to each litre of gasoline. B.C.’s carbon tax adds $0.10 per litre, and will go up one cent to $0.11 per litre on April 1, when the annual hike to the carbon tax takes effect.
When the low carbon fuel standard and all the other taxes on gasoline are added up – including a special TransLink fuel levy, provincial motor fuel tax, and federal excise tax and GST – the total additional cost to each litre of gasoline in Vancouver is about $0.65, according to McTeague.
The Biden administration in the U.S. has announced that, in response to soaring oil and gasoline prices, the U.S. and other nations have agreed to release another 60 million barrels of strategic oil reserves. That is on top of the 50 million the U.S. released in November.
That is a drop in the bucket that will have little impact on oil and gasoline prices, said McTeague.
"It's less than a day's total global consumption, which is 100 million barrels as day, so not much in the way of any significant effect, and I think markets have shrugged it off generally," McTeague said. "That's one of the reasons we're back to 110 bucks a barrel.
"Welcome to the world of scarcity. And anybody who didn't think so before, after us talking about this for the past half decade or so, there's an effect of blocking pipelines, and now we're paying for it."