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Gasoline prices could reach $ 2 a liter in Canada: analyst

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Gasoline prices could reach $ 2 a liter in Canada: analyst

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Gasoline prices appear to be on a path of around $ 2 per liter in parts of Canada over the next 13 months, according to Canadians for Affordable Energy, Dan McTeague.

A combination of rising oil prices, the state of the Canadian dollar, provincial taxes and the federal government’s Clean Fuel Standard (CFS), which comes into effect on December 1, 2022, could cause stations to -service advertise prices higher than a dollar, he said. noted.

He points to a statement from BlackRock, the world’s largest asset management firm, which said this week at a conference in Saudi Arabia that there was a “high probability” of oil reaching $ 100 a barrel. . Oil is currently hovering around $ 84 a barrel.

“I think $ 100 a barrel is not unthinkable, and it’s highly likely that it will be until 2022,” McTeague told Thursday. “So that would increase the average price [of gas] in Canada, which is about $ 1.47, that would probably add 18 cents per liter.

“So now you’re in the $ 1.65 range. You have the federal carbon tax of 2.21 cents, plus the HST, so 2.3-2.4 cents,” he continued. . “On top of that you’ve got the Clean Fuel Standard. So now you’re down to about $ 1.82, $ 1.83 a liter. Just to get to $ 100 a barrel.”

British Columbia and Newfoundland and Labrador, which have some of the highest gasoline prices in the country, according to McTeague, could see staggering numbers.

“You can see a scenario play out where we’re hitting awfully $ 2 per liter in these regions with average prices in Canada probably, at a minimum, $ 1.75 per liter,” he said.

CFS is a program designed to get suppliers of liquid fuels, such as gasoline and diesel, to gradually reduce the amount of carbon in their product with the goal of reducing greenhouse gas emissions. If reduction targets cannot be met, credits can be purchased from other companies producing cleaner fuel or suppliers can contribute to a compliance fund.

British Columbia, which already has its own low-carbon fuel standard, trades credits for about $ 475. If the CFS uses this as a standard, McTeague estimates that every province outside of British Columbia will see an immediate increase of 16 cents per liter on December 1, 2022.

Although he is convinced that this is the direction gasoline prices will take in Canada, McTeague has left the door open to unforeseen circumstances.

“We could see a fifth wave of COVID-19,” he said. “We could see a massive economic recession, which many people believe could occur due to supply chain issues and increased demand, increased growth and higher interest rates. “

All things that could cripple the global economy and drop the price of oil, he said.

With files from Reuters

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