Gas prices in Canada have been climbing sharply since the Iran war began, but how much higher they could go is unclear as consumers struggle with the higher cost of living.
Canada’s national average for regular gas is sitting just below $1.70 a litre as of publication, according to CAA, and a month earlier it was closer to $1.28.
For an average passenger vehicle, that might mean paying roughly $20 to $25 more to fill up every time.
Some regions are paying much more than the national average for regular gas, with British Columbia paying some of the highest prices, while Alberta pays some of the lowest in Canada.
GasBuddy states what individual provinces and territories are paying on average for regular grade gas as of publication:
- Alberta – $1.582
- Saskatchewan – $1.585
- Manitoba – $161.4
- New Brunswick – $1.653
- Ontario – $1.66
- Nova Scotia – $1.70
- Newfoundland – $1.78
- Quebec – $1.794
- Prince Edward Island – $1.807
- Northwest Territories – $1.848
- British Columbia – $1.923
Concerns about global oil supplies due to the Iran war have been one of the main factors driving prices up at gas pumps all over the world.
“For the bulk of Canada over the last week, 85 per cent of the reason is still what’s happening between Iran and the United States and the escalations in the Middle East,” says Patrick De Haan, a petroleum analyst at GasBuddy.
“We also have a seasonal element that will continue to ramp up for another four to eight weeks and be impactful as well. But the primary of this remains the same — that is escalations in the Middle East that have continued to essentially block the Strait of Hormuz and impacting oil supply in a major way, driving up gas prices.”
Prices for fuel paid by consumers are determined by several factors, but especially the price of raw crude oil, which has been hovering around US$100 a barrel as of publication and since the first strikes on Iran by the U.S. and Israel at the end of February.
In the days before, oil was closer to US$64.
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Oil prices are determined mostly based on expectations for demand relative to the global supply, and the conflict has led to higher oil prices because oil markets anticipate supply will be constrained as a result.
In the Persian Gulf region, the Strait of Hormuz normally sees about 20 per cent of the world’s oil, but has been effectively blocked since the conflict began after Iran threatened to attack any oil tankers allied with the U.S. or Israel that try to pass through the narrow choke point.
This is putting the global oil supply in jeopardy.
Seasonal factors can also make gas more expensive, and De Haan says there are usually three factors at play from February to late April every year that send prices up.
“Refinery maintenance, which limits how much gasoline can be produced at this time of year. That maintenance is a necessary evil before the summer driving season, when refineries are basically operating 24-7 at 100 per cent capacity,” he says.
“Demand for gasoline goes up as temperatures warm up and Canadians begin travelling more. That seasonality is going to slowly continue to be more impactful over the weeks ahead.”
These seasonal factors, De Haan says, typically cause gas prices to rise an average of five to 15 cents a litre. Still, he says the vast majority of the price increases Canadians are seeing right now are because of what’s happening in the Middle East.
Shopping around for the best price could help consumers find small improvements, but De Haan says adjusting routines and driving habits is the best way to save.
“Whether that’s reducing your rate of acceleration, making your car work less hard, try to avoid any red lines or hard acceleration, slow down on the highway by five or 10 kilometres an hour — even those small differences can add up to significant savings,” he says.
And what would it take to start moving prices down?
“If demand does start to come down enough to better match that 80 million barrels a day that’s being supplied, that is where oil prices will eventually stall out,” De Haan says.
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