As the temperature begins to rise, so does the price of gas in Saskatchewan. This change as the season in which people tend to drive more begins, is also driven by a number of factors.
Dan McTeague, a petroleum analyst with GasBuddy, said demand is one of the primary reasons the price of gasoline rises in the spring and summer.
“When you get into summertime driving, there’s also a bit of so called volatility, on the gasoline demand side,” he said. “This is where it gets into, what some refer to as, the “silly season.” Sometimes refineries can keep up with the demand and sometimes they can’t.”
McTeague noted there are a number of factors that play into why drivers are paying as much as they are for gas, and why prices spike as abruptly as they do. The primary influencing force is found in the retail market, in the case of southern Saskatchewan.
“It depends where you start from. If prices were down in the 82, 84, or 87 cents a liter range, and have just gone up to 92, what you’ve seen is a reflection of the wholesale prices increasing last Thursday,” explained McTeague.
McTeague noted there are factors outside the markets that affect the price of gasoline, saying, “Retailers usually need about seven or eight cents a liter to turn on their pumps and pay for electricity, honour credit cards and the like.”
McTeauge said the summer tends to be an unpredictable time because Canada is a “price taker and not a price maker,” referring to the price of gas being dependent on the fluctuating value of the dollar.
“We price our oil in U.S. terms. Our prices rely on U.S. demand, which is likely to hit an all-time high this year,” said McTeague, who noted that a lot of oil produced in southern Saskatchewan makes its way to U.S. refineries. “This puts a lot of pressure on refineries to put out a product at a certain level, and price. You generally won’t hear about a refinery in the U.S. going down until the price spikes in Canada.”
Canada sells about 3.4 million barrels of oil to the U.S. every year. The demand for Canadian oil from the Midwest refineries to which it is sold, rises in the summer.
Another factor in the price of gasoline is the way it is created, itself, in the warmer months, compared to in the winter. McTeague said that in the summer months, gasoline is more expensive to produce in refineries. Gasoline being used in the winter doesn’t require the expensive additives or components added to it in the summer. Those substances are added, in the summer, to prevent the gasoline being used from evaporating due to higher temperature conditions.
McTeague said, “In order for oil companies to provide the product they have to add very expensive components. They’re usually three of four cents a liter.”