With oil prices recently back to some of their highest levels in years, experts say drivers should be prepared to pay even more at the pump at the start of the summer driving season.
These higher crude prices may help hope for better days in Canada’s oil patch, but they have also helped push gasoline prices up as demand for fuel begins to take off.
“I don’t always want to refuel,” said Peter Bleumortier, as he refueled a pickup truck last weekend in Vancouver, where prices had climbed to $ 1.70 a liter. “It’s like breaking the bank.”
The benchmark oil price in North America has risen from less than US $ 50 per barrel earlier this year to well over US $ 70 per barrel more recently, approaching the highs of 2018. He spoke again about $ 100 per barrel of oil by next year.
It comes as the market generally expects COVID-19 vaccines to boost global demand for oil, although there are concerns about the potential impact of the new delta variant.
Markets will watch on Friday when OPEC oil-producing countries are expected to decide how much to increase crude production over the next few months.
Gasoline prices in Canada have also reached some of their highest levels in the past five to seven years, according to Patrick De Haan, head of petroleum analysis at GasBuddy.
A year ago, in April 2020, the average price of gasoline in the country had plunged to 76 cents, he said. Earlier this week, the average price of gasoline in Canada was around $ 1.36 per liter, according to GasBuddy.
And De Haan believes prices at the pump may continue to rise for some time to come.
“We probably won’t see a price spike for potentially four weeks, as demand is expected to continue to rise,” De Haan said in an interview this week.
“Remember, the pandemic is just starting to ease in Canada. And over the next four weeks, as more and more people feel better about going out, they will. “
He doesn’t expect higher prices to dampen consumer demand.
“Even if [gasoline] prices are hitting record highs, I don’t think many Canadians will be persuaded to stay home this summer, ”he said.
Rising fuel and oil prices can also affect the price of other goods, such as airline tickets, groceries and other commodities, De Haan said.
Economist Rory Johnston said rising oil prices can also help boost the value of the dollar, as well as government tax revenues. and energy royalties.
“I think the Canadian oil sands also seem to have really, really strong cash flow, really strong profitability,” said Johnston, managing director of Price Street in Toronto.
“It will mean higher corporate taxes. It will mean higher personal taxes for the people who are still on the payroll.”
Rising oil prices are good news for oil companies looking to rebuild their balance sheets after the sector borrowed heavily to survive a long recession which has seen thousands of layoffs.
Companies are also evolving in a changing energy landscape, in particular climate change, carbon policies and the long-term outlook for fossil fuel demand.
Analyst Jeremy McCrea said that while the company’s cash flow is improving, he doesn’t expect a significant rebound in capital spending or employment in the industry this year.
“Jobs [will] come back for a bit, ”said McCrea, who is with Raymond James and based in Calgary. “You’re going to see some spending increase there, but very, very marginally. “
This spring, PetroLMI labor market outlook forecast “modest” growth in oil and gas jobs in Canada starting next year, with the recruitment of skilled workers becoming a concern.
Organization most recent data shows a steady increase in the number of exploration and production jobs in Alberta from December to May.
Some say it looks like things are starting to change now.
Adam Waterman, a service platform coordinator at Baytex Energy, said there were already signs that things were picking up.
“Across the province, I hear we are iron rich and men poor,” Waterman said recently while working on the site of a former natural gas well near Camrose, Alta. “I haven’t been so optimistic about Canadian energy in many years.”
Scott Darling, president of Performance Energy Services, said his company was already busy doing abandonment work on well sites.
With US $ 70 worth of oil, he believes production work in the field will resume, increasing competition for workers.
“People have left the province; [it’s] really hard to attract them again, ”he said.