It’s the perfect storm for soaring gasoline prices in Canada: Roger McKnight
The price of gasoline has topped $2 a litre in British Columbia as Canadians continue to see eye-popping numbers at the pump this week, spurred upward by Russia's invasion of Ukraine.
The retail price of gas across the country averaged $1.76 per litre on Friday, up from $1.62 just two days earlier, according to Natural Resources Canada. Gas prices reached $2.00 per litre in Vancouver, $1.75 in Toronto, $1.84 in Montreal and $1.67 in Halifax.
"It shocked me. A lot of things have gone up in price but this was a lot," said Esther Peralta, as she filled her tank at an East Vancouver gas station where the sign read $1.999.
"It's getting so expensive."
Dan McTeague, president of Canadians for Affordable Energy, says the average gas price across the country is poised to rise 26 cents in one week to nearly $1.85 per litre by Sunday. The unprecedented spike comes just as Canadians were hoping to gear up for spring road trips and March break getaways.
"It means vacations postponed," McTeague said in a phone interview. "And as fuel prices cascade or filter their way through the economy, it's likely to raise the price of everything else substantially."
The ripple effect could weigh on economic growth and further boost inflation, which hit 5.1 per cent in January, its highest level since 1991.
Russia's invasion of Ukraine has pushed oil prices to levels not seen in at least eight years as tanker companies shun Russian crude and sanctions exclude some Russian banks from a global payments system, severely disrupting its exports.
Russia, the world's third-largest producer of oil after the United States and Saudi Arabia, churns out about 10 per cent of global supply.
Patrick de Haan, head of petroleum analysis for gas price information website GasBuddy.com, says hefty price increases will likely continue across Canada and the U.S.
“In Canada prices are already at all-time record highs. Much of Canada will continue to see prices go up another five to 15 cents a litre over the next one to two weeks. So the pain is equal, no matter where you are in the U.S. or Canada," he told reporters on a livestream.
Sanctions on Russia's banking and shipping industries are "putting a chokehold" on Russian oil exports, which have plummeted, he said.
The benchmark West Texas Intermediate price breached US$115 per barrel Friday, a peak that until this week had not been hit since 2008. The commodity was on track for its biggest weekly gain since May 2020 following news reports that the U.S. is mulling a ban on Russian crude imports.
Werner Antweiler, a professor at the University of British Columbia's Sauder School of business, stressed the knock-on effect of surging gas and diesel prices amid the double-whammy of higher inflation and interest rates.
"It’s getting more expensive for trains, planes, ships … and these costs are being passed on to consumers. Food items that are transported over long distances, all these imported goods tend to be more expensive," he said in an interview.
For the long term, Antweiler suggested Canadian consumers reconsider certain lifestyle choices and how they spend their money.
"That means driving more fuel-efficient cars and cutting back on our discretionary driving," he said.
Russia's invasion, which began Feb. 24, has seen forces advance into Ukraine from three sides, bearing down on the capital and cities along the strategically critical Black Sea Coast as 1.2 million refugees flee the country.