After weeks of erratic prices at the pump, Canadian drivers will finally feel some relief on Wednesday as experts predict gas prices will fall 13 cents, from $1.79 to $1.66 a litre.
But this dip will only last one day, according to former MP and fuel price analyst Dan McTeague.
“Don’t wait until Thursday or Friday,” he said. “Gas up on Wednesday and bring your jerry cans.”
McTeague says he anticipates prices will slowly start to climb back up by about three cents per day, with prices “marching” towards $2 a litre in the coming weeks, depending on how U.S. President Donald Trump responds to the conflict in Iran.
Why are prices so high?
The latest round of fluctuation in gas prices is caused by the global market responding to geopolitical issues, McTeague said.
Wednesday’s drop in fuel costs is coming in the midst of President Trump’s five-day pause on strikes targeting Iranian power plants, temporarily easing global markets during an unpredictable conflict.
“The prices will be determined by the latest musing about Iran from President Trump,” McTeague added.
The swift increase in price started at the end of February coinciding with the U.S. strike on Iran.
“We are paying 41 cents a litre higher than what we were paying on February 27,” McTeague noted.
Although prices are sporadic, they have been steadily increasing, with diesel costs going up a net of 77 cents a litre.
Patrick De Haan, a head researcher at Gasbuddy.com, pointed to the threat of attacks on ships through Strait of Hormuz as the culprit for soaring prices across the world.
“Prices for oil are going to continue going up until a supply is restored or until global demand declines to better match the realities the reduced supply,” De Haan said.
The unpredictability of global politics has made the oil markets “nervous” about what will happen next in the conflict is unknown.
If the U.S. and Iran strike a deal that opens up the Strait of Hormuz, De Haan predicts the price of gas could shrink as rapidly as it increased. For Canadians, this could be mean a gasoline prices dropping up to 25 cents a litre and diesel decreasing as much as 40 cents within a week.
However, with no immediate resolution, a steep price of $2 per litre won’t be unrealistic.
The last time McTeague remembers gas prices being this unstable was in 2008 when experts speculated that there wasn’t enough oil energy to go around.
“We saw prices ramp up very quickly,” he recalled. “They came down a little bit and ramped up further, coinciding with the 2009 global recession.”
Tips for buying gas
For Canadians to get their money’s worth in gas, McTeague recommends always filling up in the evenings, as that is when many stations will have the lowest prices.
This is because gas stations hold onto a retail margin of 12 cents a litre to cover operational costs. As stations break even towards the end of the day, McTeague says prices might drop up to seven cents on every litre.
“Never visit a gas station before 6 p.m.,” he said. “You are just ripping yourself off several hundred dollars a year by doing that.”
