It doesn’t happen often that pump prices across North America are this high for this time of year but such is the case virtually everywhere you go – pump prices have risen. And in some cases, sharply.
A comparison of year-over-year prices reveals that the average American pump prices stand at a full 35 cents a gallon higher than last year, with no state or region left untouched. In Canada, prices are worse with the average having risen nearly 22 cents a litre or up nearly double the U.S. increase by 64 cents a gallon. As April 1st approaches, many think this must be an April Fool’s Day joke that came early. Regardless, it will be an Easter we won’t forget. Whatever the feeling, there are some fundamental reasons behind the surprising resurgence of gasoline and other petroleum products.
Underlying the pump price push has been oil’s recovery from its struggles in 2017, and its near collapse in 2016. Last year at this time, crude weighed in at $48 a barrel, up an average of $8 from the previous year. Today, hanging in at $65 a barrel, there’s been a noticeable increase of between $15 and $18 a barrel, good enough to account for 13 to 15 cents a gallon. On top of that, there is general consensus that higher demand and increased petroleum product exports, which now average over a million barrels a day, according to the U.S. EIA (Energy Information Administration)are leading to higher wholesale prices of about 3 to 4 cents a gallon, while increased state fuel taxes seen in several states including California, Tennesse, South Carolina, New Jersey along with slightly higher retail margins have contributed a couple of cents to the rising pump price equation.
What makes the increase so remarkable this year is that it takes place before most states enter the full summer driving demand period and the more costly, gradual transition to summer blended fuel. As for Canada, higher carbon taxes, weakness in its currency caused by the deep discounting in the value of its number one export (oil), and ongoing refinery challenges, forced some regions like Vancouver, B.C. to import more gasoline from the U.S. This means prices are likely to break records not seen at the pumps since the summer of 2014, when oil traded at or above $100 a barrel. In fact, Vancouver will see pump prices rise April 1 by an increase of its carbon tax to $ 1.56 a litre, or $5.30 a gallon U.S, shattering all-time records.
Ironically, the city is also home to well-funded protests of the doubling of the existing TransMountain pipeline, that would not only double the amount of crude exported to world markets, thus allowing its oil to fetch higher prices which, as a consequence would strengthen the Canadian dollar, the expansion would also see more gasoline delivered to Vancouver from Edmonton, thus forcing prices down and relieving the area from a chronic shortage.
In the meantime, the U.S. and Canada can only expect prices to go from bad to worse, as pump prices break from their traditional slow ascent, just in time for Easter.