Bummed at the pump? Blame refinery work and crude price rebound
Calgary drivers have seen their gasoline bills creep up in recent days as rising oil prices and maintenance at a major U.S. refinery have rippled through fuel markets, analysts say.
But they expect gasoline prices to ease later this fall and into winter as the busy summer driving season disappears in the rearview mirror.
In Calgary, the average gasoline price went from just over 137 cents per litre on Tuesday, to just over 146 cents per litre on Thursday afternoon, according to GasBuddy.com.
Patrick De Haan, head of petroleum analysis at GasBuddy, says gasoline prices dipped “extremely low” last week as oil prices slid to their lowest level in over a year.
But oil prices have since rebounded, while maintenance at a key Indiana refinery — the largest serving the U.S. Midwest and the Prairies — has reduced gasoline supplies. The combination has again put upward pressure on fuel prices, including in Calgary.
“With this refinery shutting down significant units for maintenance, gasoline supply is impacted and the wholesale price of gasoline has gone up, not only because of oil, but because of this maintenance that’s happening.… That’s why you’ve seen prices shoot up across Calgary,” he said.
“They’re up now, seven cents a litre in the last week, and that’s why you’re seeing some discrepancies. Some stations may still have that older lower price from last week, whereas a lot of stations that are refueling are having to adjust their prices to account for the big jump in the wholesale price.”
He said refinery maintenance is typical in the fall because it’s the shoulder season for gasoline demand.
“Refineries use the quieter periods of time to do this maintenance,” he said.
“That is really one of those necessary evils to do repair, replacement, make sure and inspect these facilities so that they can operate 24/7 during the summer.”
For those who may have noticed different prices at different stations, De Haan says this also breaks down to differences in individual businesses strategies.
He believes the recent price jump won’t stick around for too long, and consumers can expect gasoline prices to decline in November and December.
“What we’re seeing now is what it will likely stay at for the next couple of weeks,” he said. “We should see prices move a little bit lower and we should see prices kind of sticking out those seasonal lows, or even declining more, as we get closer to the end of the year.”
Alberta’s fuel tax
Echoing De Haan’s thoughts on oil’s effect on gasoline prices, another analyst says the volatility in what Calgarians pay at the pump is tied to the larger market.
“We are not an island when it comes to gasoline supply and demand,” said Susan Bell, senior vice-president of downstream at Rystad Energy. “Whenever I see pump prices go down in Calgary, I first look to the global markets.”
Bell believes gasoline prices have been somewhat turbulent because they’re tied to crude oil prices, which softened last week.
West Texas Intermediate prices — North America’s benchmark for crude oil — were around $75 US a barrel at the start of September. Last week, prices skidded to around $66 US a barrel.
Since then, WTI prices have rebounded to over $71 US per barrel as of Thursday afternoon. Bell says oil prices have a specific impact on what Albertans pay at the pump.
“The other thing to remember is that with the Alberta tax on gasoline, we are now in a crude oil price environment where WTI is below $80 US a barrel. So on Oct. 1, that tax goes from the current nine cents a litre back up to 13,” she said, referring to the fuel tax model that the provincial government reinstated for consumers this year.
She says that, for Calgarians, gasoline typically isn’t a discretionary cost, so any time prices are lower, it’s usually better for the average consumer.
“I guess if I could give you some good news, our view is that crude oil prices and gasoline differentials to crude oil are going to stay relatively soft for the next couple of months at least,” she said.
“Even in the summer when [gasoline] was up around $1.65 a litre, we’re not going to see that any time soon.”
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