Ottawa gas prices predicted to hit historic high of $1.71 a litre this week (2024)

Gasoline prices are expected to hit historic highs in Ottawa this week, fuelled by a global supply squeeze and industry anxiety over the military crisis in Ukraine.

Average prices rose about two cents a litre on Wednesday. A leading expert predicted a seven-cent jump on Thursday and four more cents on Friday: a 13-cent spike in only three days.

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Dan McTeague, president of Canadians for Affordable Energy, said the increases would put the average price of a litre of gas in the Ottawa area in the $1.71 range by the weekend, the highest ever. It also means a fill-up on even an average-sized car will push $100.

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And it isn’t nearly over.

McTeague said prices could very well hit $1.90 a litre within four to six weeks across southern Ontario, including Ottawa. Asked if a $2 litre would shock him, he replied:

“No. Not now. If you can go from $1.22 in Ottawa to $1.70 in a year, it wouldn’t be hard to go up 30 more cents.”

According to historical data kept by GasBuddy, the average price of a litre of gas in Ottawa last Saturday was a record $1.60, a figure that dipped slightly as the work week began. Premium prices were accordingly even higher, with Petro-Canada charging $1.93 for ultra grade at some outlets on the weekend.

Those numbers didn’t hold steady early in the week. There was gas available at discount retailers in the $1.48 range Tuesday evening, but the basem*nt price rose to $1.54 Wednesday afternoon, according to GasBuddy’s live ticker.

McTeague said there were two main reasons for soaring prices. The main one — an issue of “fundamentals” — is a global supply shortage of about 2.5 million barrels of oil a day. “Then along comes Vladimir Putin, who decides to launch a war.”

He pointed out the price of oil has risen from about US$75 a barrel on Jan. 1 to the $110 range this week. “And then the icing on the cake is Putin and Ukraine.”

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Gas prices are up about 40 cents a litre from last year’s average of $1.20. The lowest recorded average going back to 2008 was 61.3 cents on Dec. 28, 2008.

McTeague noted that consumers may see variations from these averages because retailers have a margin of about 7.5 cents a litre to play with in their pricing.

Gasoline prices are a major component of a sharp jump in the consumer price index, which rose 5.1 per cent in January, the highest rate in about 30 years.

McTeague says he’s also keeping an eye on the price of diesel fuel, widely used in the trucking industry, an important input cost into the price of transporting everything from groceries to any number of consumer products. It has risen 20 cents a litre in less than a week, he said.

“The last time I checked, you don’t get your groceries delivered by homing pigeon.”

Diesel fuel is also an important input cost in agriculture, he added, one more factor that could drive up food prices.

Russia is a major oil exporter — the world’s third-largest producer — and there are worries the instability will result in a crimp in the supply line, pushing pressure on oil prices.

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Ian Lee, an associate professor in Carleton University’s Sprott School of Business, agreed with McTeague’s analysis, pointing to a “generalized uncertainty” caused by the worldwide pandemic’s effect on economies and the specific threat presented by the Russian invasion of Ukraine.

He said Wednesday we may either see Russia strategically trying to turn off the taps on its vast oil and gas production or see consuming countries switch to other supplier nations — two scenarios with the same outcome: a tighter supply of energy that pushes up prices.

Lee also said there was discretionary spending that could be reduced or eliminated in the face of rising prices, except in two basic areas: putting food on the table and heating the house. “Energy and food prices, which are really going to hit, are much more critical to the average person.”

Consider, too, he added, that about 90 per cent of goods we buy rely on trucking, short or long haul. “And trucks use fuel and that cost gets embedded in the price of, literally, everything you buy, not just food.”

He said he wouldn’t be surprised to see high gas prices well into May and June.

To contact Kelly Egan, please call 613-291-6265 or email kegan@postmedia.com

Twitter.com/kellyegancolumn

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