The Co-Op in downtown Grande Prairie (photo by Liam Verster)

By Liam Verster

Gas Prices

Gas prices in Alberta expected to continue climb in coming weeks

May 4, 2020 | 1:51 PM

In the past week, the price per litre of gasoline in Alberta has increased by nearly 12 cents, and is expected to continue to rise as the country gradually reopens and demand increases.

On Tuesday, April 26, the price per litre in Alberta bottomed out at just over 68 cents, and in the eight days that followed, the average price rose to nearly 80 cents.

Patrick De Haan, the Head Petroleum Analyst with GasBuddy.com, says that spike was in direct relation to a decline in gasoline inventories.

“Which is rather surprising to happen so quickly, given that demand for gasoline still remains very low. Oil prices have jumped some 42 per cent in the last week, as provinces and some states in the United States start to reopen. We’re starting to see an intersection between refineries that have cut gasoline production, and now starting to see an increase in demand, and that has pushed prices up.”

According to GasBuddy, the average price is currently at 79.2 cents per litre.

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De Haan says, as more of Canada starts to reopen, and the demand goes up, the gas prices will likely continue to increase.

“The more cities and communities that reopen, in the short order, the quicker gas prices rebound. But I still think gas prices will still remain far below where they were a year ago, when Alberta’s average was about $1.24 per litre.”

He adds it’s hard to make exact predictions, but he expects the price per litre to get up to about 90 cents in the coming weeks, and then increase to about a dollar in the weeks that follow.

The lows are not expected to be seen again, barring a new surge in COVID-19 cases that forces provinces to back track and close again, in which case demand would likely drop and the prices would go down.

Meanwhile, the price for oil has been increasing, mainly because gasoline is one of the largest portions of where crude oil is used.

“So if gasoline demand rebounds, we have found support for the price of oil. [Also], OPEC’s production cut agreement started May 1, last Friday, and so now we are in a new environment where, depending on where numbers go, OPEC is supposed to have severely cut oil production and that is likely putting a floor and causing oil prices to go up as well.”

However, De Haan does say global oil production is still much higher than the demand, and OPEC’s cut in production is “a sign of a new reality that far less crude oil is being consumed these days, and Canada may have to do it’s part to cut oil production too, to put a floor under the price of oil.”

As of Monday, May 4, the Canadian Crude Index is at $15.94 US ($22.44 CAN), and Western Canadian Select prices a barrel of oil at $16.28 US ($22.92 CAN) according to oilprice.com.