Gas prices jump to record high

Gas prices over last week began to spike following unrest in the Middle East.

As far as the effect on crude oil goes, Libya was “the turning point,” according to GasBuddy.com co-founder Dustin Coupal.

He said the rising cost of oil, which topped last week at $120 a barrel before falling to below $100, could keep rising if unrest continues.

  • Mon Mar 7th, 2011 12:00pm
  • News

Cameron Orr

Black Press

 

It may be about 9,550 kilometres to the riots and protests in Tripoli, Libya, but Canadians are feeling the pinch when it comes to how much they pay at the pump.

Gas prices over last week began to spike following unrest in the Middle East.

As far as the effect on crude oil goes, Libya was “the turning point,” according to GasBuddy.com co-founder Dustin Coupal.

He said the rising cost of oil, which topped last week at $120 a barrel before falling to below $100, could keep rising if unrest continues.

That being the case, it’s a peculiar situation considering the stock of gas in Canada at the moment.

“Even though crude oil prices are going up, you wouldn’t expect that the price that we’re paying should be rising that quickly,” he said. “The reality is we have plenty of crude oil here, and we have plenty of refined gasoline in Canada, and there’s no justification for an increase in price.”

The reason it’s going up now, he said, is due to an outlook that in three or four months the cost of buying crude oil could be much higher.

“It’s the same old story, when these crude oil prices increase, retail gasoline prices increase very quickly in response to that, and that’s based on, some say greed, but I think it’s more speculation and concern for a business’ costs increasing in the future more than what they’re selling fuel for.”

Yet the situation is bigger than what’s happening in Libya and the concern now is on reported “days of rage” organized through social networking of further unrest in other countries.

If places like Iraq and Kuwait get involved in turmoil, it could spell very bad news for the price of oil.

“I think unfortunately the consumers get punished in the end for any kind of disruption in the marketplace,” said Coupal. “There’s nothing to stop retailers from raising prices.”

In Smithers last week, gas went from 114.9 to 119.9 at most places. Gas was going up in other communities as well. In Terrace, gas stations went up around a nickel to 116.9 cents a litre. Burns Lake was holding at 114.9.

Coupal said it was difficult to speculate what the summer might look like. Things could stabilize if protesting cools off in the Middle East, but gasoline prices may continue to rise if it continues to heat up.

“The general worldwide economy is not terribly strong right now so the demand is not really great so I don’t know if we’ll see big summer spikes like we have in the past,” he said.

Typically this is the time of year where consumers see low prices, but February’s prices are record breaking.

“This year … we’ve never had higher gas prices ever recorded in February than we have now.”

And if things look better geopolitically? Well, a drop in price may be slow as well.

“They’re eager to raise prices and you’re only forced to lower prices,” he said, pointing out that prices usually drop only due to competition from other retailers.