Gas prices in Medicine Hat hovered around 163.9 cents per litre for regular Friday.--NEWS PHOTO KENDALL KING
kking@medicinehatnews.com
Canadians are paying record highs at the pump. On Friday, the Canadian Automobile Association calculated the average cost of gas nationally was 193.5 cents per litre. Last year at this time the national average was 127.2.
While Albertans are paying less than residents of every other province – averaging 166.2 cents on average Friday – the high price is taking its toll, drivers say.
“It’s impacted everybody; it doesn’t matter how much disposable income you have,” Hatter Doug Thompson told the News. “Luckily, I can still afford gas but people who are struggling, it’s been a big increase in their cost of living.”
Thompson, a loyal GasKing customer, is thankful Alberta’s government paused the 13 cents per litre gas tax and hopes it is kept off following a July reassessment.
Terry Seitz, who drives seven days a week for work, is also glad Alberta gas prices are less than elsewhere in the country, even if higher than usual.
“What can you do?” Seitz said. “It’s going to be what it’s going to be, but it’s nice it’s a little lower (now).”
Alberta’s gas tax pause went into effect April 1. The initiative has been approved for the 2022/23 fiscal year, but will undergo quarterly assessments. The 13 cents tax could potentially be reinstated following assessment, dependent on the trading price of WTI oil. The tax will be reinstated if the price drops below $80 per barrel.
Some Canadians have questioned why the country is experiencing such high prices.
“We have to remember Canada is a price-taker; we don’t determine the national, continental or international prices,” Jim Groom, political science instructor at Medicine Hat College, told the News. “We are subject to international price-fixing standards, so we don’t really get a choice as to what the prices will be.”
Not only do international markets impact Canadian gas prices, so do international affairs, Groom explained.
“Back when the pandemic first hit, gas, at one point, was approximately 65 cents a litre,” said Groom. “As it was really low, there was no incentive for oil companies to do any exploration. And they didn’t go out and raise money to do more, because it’s pretty hard to raise funds for extra exploration, or pipelines, or anything of that nature, when everything was pretty tenuous. And, of course, the demand for oil sunk totally at that point.
“Fast forward a couple of years, and the Russians decide to invade Ukraine,” Groom said. “Russia is one of those top producers in the world for oil and gas … And so, when the EU put sanctions on Russia, they lost incentives to produce much oil.
“So there was nobody working on developing it for a couple of years during the pandemic, then we get a sudden loss of big contributors,” said Groom. “That starts to exacerbate the supply and demand.
“When demand goes up and supply goes down, we ended up paying a premium price for the oil and gas.”
While several U.S. oil companies have recently faced accusations of price gouging, Groom says it unlikely local gas prices are set by such actions.
“As I understand it, it’s a very small markup for local companies,” Groom said. “If you’re running your own shop, you don’t have much leeway there. Of course, everybody always said, ‘What a coincidence. Every time gas goes up or down, every company seems to have identical prices,’ which always sounds like price fixing. But it’s competitive.”
The News reached out to several local and national gas retailers for comment, but received only one reply, from a Medicine Hat gas station owner who asked to not be named.
The owner said his station’s prices are set in accordance with universal wholesale rack prices.
Groom warns drivers to not expect a decrease in such prices any time soon.
“As long as the war goes on in Europe and as long as issues keep affecting supply and demand, we’re gonna stay this way for a while, I’m afraid,” he said.
