“Because you can drive from one gas station to the next and find a difference of 10 cents, that’s entirely possible these days,” said energy economist Werner Antweiler about recent price dips and spikes at the gas pump.
Those enjoying low gas prices in recent days should expect more ups and downs before life returns to normal.
Since remote work became the norm during the COVID-19 pandemic, road traffic has decreased and with it, gas prices.
Combined with international forces competing over oil prices, it’s a “double whammy” that results in some dramatic dips and spikes at the gas pump, says Werner Antweiler, an energy economist and professor with the University of B.C. whose work touches on market predictions.
For nearly two months, gas price data shows the national average price of gasoline has decreased. In Vancouver, Antweiler’s research shows gas prices hitting below 90 cents a litres in late April, compared to $1.70 at the start of May 2019.
“There’s really two issues going on at the same time. On the demand side, of course, we have COVID-19 and the significantly lower economic activity because people are staying at home or working from home and that’s certainly playing out,” said Antweiler. “But it’s combined actually with the price war that was started by Saudi Arabia and was really directed at Russia.”
Despite an agreement in effect May 1 among a number of nations — including Russia and Saudi Arabia — agreeing to cut petroleum production by 10 million barrels a day, Antweiler notes that Russia and Saudi Arabia continue to grapple over market share.
Throw in the international struggle to balance supply and demand, and a number of quickly filling or already full storage tankers and facilities, and the result is that prices at your local gas pump are more likely to see movement than not.
“So now we’re getting into a situation where any excess supply has nowhere to go and that means all producers have to cut back,” said Antweiler. “So you can expect to see more volatility in the next few weeks as we’re getting to these points where the storage tanks are full and that could start to depress prices again.”
But Antweiler suggests the turmoil — and price increases — will return in the fall when COVID-19 is expected to be under control and demand returns. In the meantime, there’s no harm in driving a few blocks further if the pump price you see is not what you want.
“It is essentially important for everybody to have a look at their local prices because you can drive from one gas station to the next and find a difference of 10 cents, that’s entirely possible these days,” he said.
“So, for those who are driving and need to drive for professional reasons, they will still find great value in comparison shopping and looking at the poster prices.”
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