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Pump prices to be given a boost by La Niña?

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As motorists across Canada and the U.S. are suffering from whiplash given an unexpected fall season pump price hike, it would appear that mother nature has some unpleasant news in store for winter.

Significant demand for fuel and tight gasoline supplies is not something often seen for this time of year. But demand for petroleum products in the U.S. continues to surge, while many refineries, who delayed scheduled fall time maintenance to fill the production gap created by hurricanes Harvey and Irma, have only just started to return to full production. Increased gasoline and diesel exports and the apparent shunning of imports from Europe have left the supply landscape strained and, with the recent rally in crude, fuel prices in some regions across the continent are at their highest levels since the summer of 2014.

So this may come as unwelcome news….

According to meteorologists, there is a 65% to 75% chance that the winter of 2017-2018 will be harsher than expected, up from only a 55% probability last month. The phenomenon, known as La Niña, dramatically affects weather patterns when there is evidence of cooling of the tropical part of the Pacific Ocean. The effects of La Niña, which could begin in December and extend to April, could bring with it increased rainfall in South Asia and Australia, drought in South America and below-average temperatures with above average precipitation—read snow.

Weather forecasters are already aware of the deep freeze in the Canadian Prairies, which yesterday saw record cold, and so if the trend continues, expect a greater than expected draw on heating fuels such as diesel/distillate and furnace oil. It could also impact natural gas and, in turn, affect the costs of refining gasoline, not to mention present a challenge for equipment in the refining process. Such was the challenge in the winter of 2013 which saw pump prices soar and propane shortages occur due to an unforeseen, La Niña-inspired cold snap that season.

The outlook for the upcoming season is one that looks a whole lot colder in the northern hemisphere and drier in the south. Expect to pay more to stay warm, get to where you need to be and the cost of living generally from hydro/water bills to groceries. Thanks, La Niña!

If you haven’t already, it’s probably time to keep a constant eye on your free GasBuddy App to avoid paying even more this winter.

Senior Petroleum Analyst, Canada

Dan is a skilled and noted bilingual (French and English) consumer advocate specializing in energy and current affairs. Known as Canada's “Gas Guru,” he founded tomorrowsgaspricetoday.com to better help motorists anticipate the price of gasoline in advance across Canada. He has over three decades of experience in the petroleum industry, as a parliamentarian and an analyst.

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