The Head of Petroleum Analysis at GasBuddy says taxes and an increase in demand with easing COVID-19 restrictions are the reason for a big spike in Kamloops gas prices this week.
“There will not be much meaningful relief until we either see supply go up notably or demand comes down,” Patrick De Haan told NL News. “Demand is high, supply is certainly not.”
“The demand probably will start to decline seasonally in mid-to-late August. But the declines in prices are not going to be as significant. The level of taxes has set essentially a new floor on prices.”
In B.C., the carbon tax increased to $45 per tonne of carbon dioxide equivalent emissions (CO2e) on April 1. Rates will increase once again to $50 per tonne of CO2e on April 1, 2022.
However, De Haan says there is no one tax increase that has led to this price increase. Rather, he notes, prices have been steadily increasing over the past several years because of increasing carbon taxes and provincial taxes in Canada when compared to the United States.
“Gasoline taxes have gone up in many states in the U.S. as well but nowhere near the level that’s been seen in Canada,” he said.
“Back in 2008 when Canada previously hit a record high of nearly $1.40 a litre, oil was $150 a barrel. Now Canada finds itself at that same mark and oil is half of that, and the entire difference is the increase in so many various taxes across Canada.”
De Haan tells NL News the price of gas will likely remain high until the production of oil is increased, not just in the Middle East, but also in North America.
“At [the OPEC] meeting early in July over Canada Day, there was no agreement on an increase in oil production which is what the market is looking for,” he said. “With the economy continuing to recover from COVID, the world needs to crude oil and that’s why prices are likely to remain high.”
“We also are contending with fossil fuel companies finding it more difficult to do business. Banks are slowing down funding of oil companies because of social outcry towards fossil fuel companies and there’s a price impact with that.”
The average gas price in British Columbia right now is $1.527.
