Toronto gas prices to exceed record high later in May or June: Energy expert
· Toronto Sun
An energy expert says Toronto drivers should prepare themselves for much higher gas prices – as in setting a new record – towards the end of May, early June.
Dan McTeague, gas industry analyst and manager of the website affordableenergy.ca, says he expects gas prices to exceed the record of $2.15.9 per litre set in Toronto on June 11, 2022 following sanctions imposed on Russia after they invaded Ukraine.
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“The difference between now and then, it’s simple math, but that knocked off about 3% of the world’s potential (oil) supply,” said McTeague.
“This particular issue in the Persian Gulf is about 20% of the world supply. We’re looking at an increasing likelihood as we get closer to summer demand driving season, especially after the May 2-4 weekend, which is next weekend, for prices to escalate to at least another 20 to 25 cents a litre between now and the end of June. $2.20 a litre is definitely in the for-seeable future. That would be an all time high and it would stay high. That’s not just a one day event where it comes down after a week or two. It’s like it stays at that high for quite some time. We’re still testing prices that have us going to $1.90 (a litre) likely by Wednesday and maybe a few cents more as the week goes on.”
Strikes to impact oil supply for some time: Expert
The impact of U.S. strikes on Iran has put a big unprecedented limit on oil shipping.
Even if things stabilize to the point the Strait of Hormuz reopens, there will be a significant lag until supply can catch up to demand, added McTeague.
“The longer the extent of the war, the damage done as a result of it, and the lag time to get back up on our feet means that there’s a huge disconnect between supply and demand,” said McTeague.
“The supply is extraordinarily short. We’re at about a 1.5 billion barrels less than what the world uses and so that’s going to leave a permanent or rather I should say a much longer impact even if there was some kind of resolution which there doesn’t appear to be.”
Breaking point
McTeague says there will be a breaking point for drivers when it comes to buying gas but he can’t predict what that might be.
“There has to be a price signal that destroys demand,” he said. “That’s what happens under economics fundamentals 101. You have to have prices in order to curb demand in order for supply to catch up. But supply being offline for such a long period of time means we haven’t hit that point yet. I’m not suggesting that it’s a great thing that we need to. No one wants high prices nor should we in a country like Canada have that.”