Greater Victoria motorists are facing record-high prices at the pump, and a University of British Columbia analyst is warning we could be paying as much as $2 per litre by summer.
The price for a litre of regular fuel moved to $1.799 at many stations in the capital region on Wednesday, from $1.653 just a few days ago. Costco in Langford was still selling gas at $1.619 — the lowest price in the region.
Higher prices will probably remain for some time, said Dr. Werner Antweiler, an associate professor at UBC’s Sauder School of Business who specializes in international trade and finance, gas prices, energy systems and climate-change economics.
Rising prices are driven almost entirely by international factors, he said Wednesday, noting the cost of a barrel of oil is higher now than it has been since 2014. The price for West Texas Intermediate, a light, sweet crude oil, closed Tuesday at $92.07.
“The bottom line is obviously supply and demand, and right now we have seen demand catching up to pre-pandemic levels.”
Production facilities are ramping up to meet the new demand, he said, but the situation in Ukraine — where Russia has appeared to be on the verge of an invasion, although it recently pulled back — is complicating the situation for international markets.
The tensions have cast a “big shadow over all the transactions in energy markets, as greater uncertainty always is associated with everybody kind of rushing to fill up their inventories,” Antweiler said, driving up demand at a time when supply is constrained.
Russia is a major player in the global oil market, producing about 10 million barrels per day, or 10 per cent of the world market, he said.
However, negotiations between the U.S. and Iran are underway in Vienna over a potential new nuclear deal that could see sanctions against Iran lifted, he noted. If that happens, more capacity could come online. “That could help alleviate the situation a little bit.”
If the uncertainty around Ukraine remains or tensions increase, oil prices could climb to more than $100 a barrel, Antweiler said — which could lead to prices of more than $2 per litre at the pump in B.C. this summer.
“It all comes down to what [Russian president Vladimir] Putin decides to do.”
Premium-grade fuel in the capital region was already at $1.899 at several service stations on Wednesday afternoon.
Antweiler is also anticipating additional increases in the carbon tax in the next number of years, which will keep gas prices high.
Motorists should consider more fuel-efficient options or switching to an electric vehicle, said Antweiler, who drives a plug-in hybrid vehicle and says he fuels up only once every couple of months.