Analysts say high prices are here to stay

There are several factors at play in the soaring gas prices consumers are seeing, says Patrick De Haan, petroleum analyst for GasBuddy in Chicago, Ill.

When everything shut down in the early days of the pandemic, demand for gas dropped, so suppliers cut back on production. But with the introduction of vaccines, Canadians were ready to get back on the road. Unfortunately, by then, the supply wasn’t there.

“COVID-19 is a big part of this,” says De Haan. “In some ways, that permanently changed the landscape. We’ve seen oil refineries shut down and they're not necessarily going to come back.”

De Haan notes prices have recently dropped from their mid-June highs — but a return to normalcy “may take some time.”

How much time?

“I don't see us getting back to norms for potentially a year or two, maybe three,” says De Haan. “Oil is cyclical, and high prices will eventually lead to lower prices, which will eventually lead to higher prices. There's never a perfect balance.”

“We may be stuck in this higher price era for a little while...I do think we will eventually settle back down. But when we do settle down, it's not going to be to the $1.30, the $1.25/liter mark, it's still going to be fairly uncomfortable.”

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How willing are Canadians to change their driving habits?

The idea of dealing with high gas prices for years to come may send some into a tailspin.

In a poll conducted by the Canadian Automobile Association (CAA) late last year, an overwhelming 84 per cent of drivers rated themselves as either very concerned (46 per cent) or somewhat concerned (38 per cent) about rising gas prices.

Researchers then asked if drivers were planning to change their habits due to fuel prices. Seventy per cent expected to be impacted in some way, with 15 per cent saying it would change their habits “a lot,” 19 per cent anticipating “somewhat” of a change and 36 per cent planning “a little” change. For those willing to change their habits, there are simple steps that can help reduce gas costs.

Practical ways to cut down your costs

Obviously, the best way to avoid high gas prices is to cut back on your driving. Consider making some trips by public transit, by bicycle or on foot, especially if you live in an urban area.

But for a good percentage of Canadians, driving less may not be realistic, especially if prices stay high as long as De Haan anticipates.

Fortunately, CAA offers simple tips on its website to help drivers get more mileage out of each tank.

They include accelerating gently; avoiding speeding or idling; decreasing drag by removing roof or bike racks when they’re not needed; and keeping up with your regular car maintenance.

While those may not seem like dramatic changes that will impact your gas consumption, D’Arbelles says in combination, they could save drivers up to 20 per cent on fuel in a year.

“On average, if someone spends about $2,000 on gas, if you're saving 20 per cent … that’s a pretty penny.”

Take, for example, avoiding high speeds. Natural Resources Canada says most vehicles are fuel-efficient between 50 and 80 kilometres per hour, but speeds higher than that increasingly use up more fuel.

At 120 km/h, a car uses 20 per cent more fuel than if it was going 100 km/h. And yet the higher speed would only save a driver two minutes in travel time on a 25-km trip.

With these tips in hand, drivers can hopefully weather surges at the pump until supply can catch up with demand.

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About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

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