Smoking hot U.S. and Canadian economy to blame for rising gas prices

This year an increase in demand for fuel in the U.S. is driving up prices more than usual

CBC News

April 03, 2017

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A booming economy south of the border and a seasonal drop in supply is pushing up gasoline prices above $1.40 a litre in Metro Vancouver, according to one expert.

Roger McKnight, a senior petroleum analyst at En-Pro International, says gasoline prices typically rise in the spring as refineries undergo a semi-annual maintenance period in February or March to prepare for the summer driving season.

But he says this year an increase in demand for fuel in the U.S. is driving up prices more than usual.

“We’ve got the gasoline inventories dropping but we see demand edging up in the United States, so that’s a double whammy right there,” McKnight said.

He said the Trump administration, a decrease in unemployment rates in the United States and OPEC’s production cuts are all factors in the price increase.

“Gasoline prices across Canada are not made in Canada,” he said. “Unfortunately, Vancouver is basically following one of the largest gasoline demand areas in the world.”

Prices a reflection of the economy

McKnight is also concerned about the increase in demand for distillates like diesel fuel, heating oil, marine fuel and jet fuel, up 13 per cent since last year.

“This year is a little bit different because of the increase in demand for transportation fuels …This is an indication that the economy is on a real roll because transportation fuels are used to bring manufactured goods to the market,” he said.

The record number of car sales is also driving demand, he added.

“Everything indicates that demand is going to increase and so will prices over the short-term,” McKnight said.

McKnight expects gasoline prices will continue to build until the end of April and then drop off after the Memorial Day weekend in May.