Canadians could benefit on Sunday from the biggest drop in gasoline prices since 2009. Concerns about a virulent new variant of COVID-19 could cause a drop of 11 cents per liter at the pump.
Canadians for Affordable Energy, Dan McTeague, said the average price across the country could drop to about $ 1.32 per liter, before picking up again midweek.
“(Sunday) will be the biggest drop in pumps we’ve seen since 2009,” he said in an interview.
Global crude oil prices plunged on Friday amid fears over the new variant called Omicron which prompted Canada to ban entry to foreign nationals who have traveled to southern Africa.
The price of crude oil for January delivery fell 13.1% or 10.24 US dollars on Friday to settle at $ 68.15 per barrel.
According to McTeague, “Sunday and Monday will be the best days to refuel for Canadians, including in British Columbia,” which is facing rationing due to severe flooding.
Residents of the East Coast will not immediately reap the benefits of lower prices on Sunday, as its regional regulatory system averages price movement. This provides price predictability, but blurs their reduction.
National gasoline prices have increased an average of almost 43% over the past year. The recovery of the global economy after lockdowns linked to the pandemic has led to an acceleration in crude prices.
However, McTeague believes that Canadians should not get too used to this decline. Prices are likely to rise, he said, as OPEC and its allies, which are meeting on Monday, will likely refuse to raise production any further. Energy traders are realizing Friday’s drop was overblown and flies in the face of the markets, he added.
Unless there is a turnaround, he expects oil prices to likely recover to around US $ 3 to $ 4 a barrel by Monday or Tuesday. This means that by Wednesday or Thursday, increases of the order of four or five cents per liter are to be considered.
McTeague has said some gasoline savings will continue for a few weeks, but he expects crude to rise to around US $ 90 per barrel, which would translate into prices in Canada exceeding $ 1.50 per liter.
The impending carbon tax increases will also have an impact on prices. A tax of 2.5 cents per liter, including Harmonized Sales Tax (HST), will come into effect on 1is April 2022. This will be followed in December by the Clean Fuel Standard which will add 18.1 cents per liter including HST, McTeague said.
The Canadian Automobile Association said on Saturday morning, Manitoba had the lowest average pump price at $ 1.35 / L, followed closely by Alberta at $ 1.377, while Newfoundland and Labrador was the highest at $ 1.583, just ahead of British Columbia at $ 1.558. In Quebec, the average price was $ 1.512. In New Brunswick it was $ 1,468.