Gas prices have spiked back up above $2 per liter around Metro Vancouver and that financial gut punch has left many folks worried about how much longer they can afford to fill up.
Over the weekend, some drivers said they filled up on $2,339 per liter of regular.
The price slightly missed the all-time record for the region, which was set on June 6 at $2,369 per liter.
Paul Pasco, principal consultant with Kalibrate, explains these painfully high prices in the Lower Mainland are because of a “perfect storm of a down refinery, ethanol outlooks gloominess and a potential rail strike” in the US.
The Lower Mainland supply chain is directly linked to the western US states in terms of prices. So, much like Vancouver, Washington and California gas prices are also high.
These states are seeing the highest prices in the US due to wildfires forcibly shutting down some refining capacity in the region, causing a short supply.
“Even with excess production linked to the attempts to catch up on distillate fuels (diesel) the summer drive season has still taxed supplies,” Pasco added.
It didn’t help when Phillips 66 Ferndale Refinery in Washington State shut down for maintenance since Canada was already tight on supply, he said.
“In addition, the fuel blending regulations on the West Coast are amongst the most stringent in North America. Corn yields fell to 7% below pre-pandemic levels last week. And ethanol accounts for 37% of ethanol demand in the US. And some forecasts are saying corn yields could be down this year to near 2012 levels,” Pasco explained.
“This has pushed prices up,” he adds, as this outlook was exaggerated by the potential US rail strike, which led to some delayed deliveries.
Many analysts believe the demand is above normal levels since people have returned to the office and school.
“So we are being forced to move again and use fuel,” Pasco said.
The good news ahead
When it comes to the near future, Pasco says he expects some prices to dip but consumers shouldn’t celebrate quite yet.
“I would expect that with the refinery coming back on folks in the Lower Mainland will see some relief,” he said. “And with oil prices currently being pulled down by recession talk, there is some hope on the horizon.”
However, he warns the relief may not be as much as people want to see.
“The physical tightness in the market will remain and continue to keep prices up. And as we move through the recession and look towards recovery prices will start to climb again.”