Calgary gas prices jump as much as 20 cents overnight
CALGARY -- Despite the low price of oil, retail gas prices have jumped considerably overnight at some Calgary gas stations.
According to GasBuddy.com, the average price for regular unleaded gas in Calgary late Thursday morning was 70.2 cents per litre, but some stations are still charging as low as 54.9 cents per litre.
Some energy analysts suggest the increase at the pumps has to do with the price of oil and consumption slowly starting to increase in the United States.
The price of crude has risen about 80 per cent over the last 48 hours from a low of $10 per barrel for the West Texas Intermediate June contract to around the $18 per barrel range.
CIO with Auspice Capital, Tim Pickering, says parts of the United States that consume higher volumes of gasoline are starting to see an uptick, especially as economies reopen in southern states.
"If we do see transportation pick up because economies start to open, we will start to chew into the gasoline inventories and the large amounts of storage that are available," Pickering said. "That will have gasoline bounce up the price most definitely."
Werner Antweiler, associate professor of economics at the University of British Columbia’s Sauder School of Business, says uncertainties in international oil markets are also playing a big role.
"What I see, particularly in Calgary, is an uptick in the refinery margin, not so much what is happening in crude oil prices but it’s really the refineries adjusting to the new situation and their output," Antweiler said. "That means demand has been way down with production lines shutting down and spilling over into gasoline prices."
Antweiler adds that there is still a little bit of time to go for full storage capacity to be reached, but once tanks are completely full there are little ways to cut down production.
"I fully expect price volatility to continue and oil and gas prices for consumers to remain low throughout the summer and into the fall," said Antweiler. "There is certainly a bottom where it can’t go any further because it will cost money to refine oil and cost more to get it through the pipelines and even if the crude oil price is as low as it has been, we’ll still see gas prices in that neighbourhood of probably 80 cents in Calgary.”
Experts suggest demand and production will slowly come back as economies recover, but the future price of oil is not expected to reach the $30 per barrel range in what’s being called one of the most unprecedented years on record for oil and gas markets.