Gas prices rising but ‘no one can really predict’ how much: fuel expert

Canadian Fuels Association VP Carol Montreuil explained that prices at the pumps will rise, but that the war in the Middle East does not affect Canada's overall

The war in the Middle East is pushing gas prices up, and Montrealers could soon be looking at a 10-cent spike at the pump.

All the same, predictions that prices will shoot past $2/litre in the coming weeks are a leap, according to Canadian Fuels Association VP Carol Montreuil - though he adds consumers should not expect them to go down any time soon.

“No one can really predict where prices are going to be, and I wouldn’t trust anyone trying to predict where the price is going to be in a month or next summer, but certainly, when we look at the trend, the trend is upwards. The pressure on prices will be upwards,” he said.

• READ MORE: Price at the pumps: ‘It won’t be long’ before gas prices rise

According to Essence Montreal, which tracks gas prices, the lowest price per litre in the region on Tuesday is $1.39/litre at the Costco in Brossard, as well as the Petro-Canada on Renaissance Avenue and Esso on Curé-Labelle Boulevard in Laval.

Prices on the Island of Montreal, contrarily, have shot as high as $1.62 at the Shell on Highway 25 in Anjou.

The following are some of the highest and lowest fuel prices in Montreal (as of 12 p.m. on Tuesday):

Interconnected trade world

These price hikes, Montreuil explained, happened immediately despite the fact that Canada imports very little crude oil from Iran or Venezuela, both military targets of U.S. President Donald Trump.

“What’s important to understand is whether we’re talking Venezuela or we’re talking Middle East, people are surprised to find out that very little, from a volume point of view, very little of that crude makes it to North America,” said Montreuil, adding that 80 per cent of Middle East oil goes to Asia.

“People are asking questions: so how come prices are going up even here in North America? What needs to be understood is that these markets are linked to each other. So, when there’s an event happening at one part of the world, prices on various platforms, whether it’s Europe, Canada, United States, all go up because these markets are interlinked so closely.”

The WTI Crude oil price was at $62 on Feb. 17 and $65 a week ago.

It reached $77 on Tuesday.

These spikes are nowhere near the increases seen during the historic oil shocks in 1973, following the Yom Kippur War or in 1979, following the Islamic Revolution in Iran.

“At that time, prices quadrupled,” said Montreuil. “Prices went from $3 to $12 [a barrel], prices were really low in the ’70s, and then during the Iranian revolution in ’79 again, prices doubled from about $15 to $30.”

However, at no time, Montreuil added, was the Strait of Hormuz, connecting the Persian Gulf to the Gulf of Oman along the coast of Iran, blocked.

“None of these events led to a blockage or stop or a flow through Hormuz Straight like what we have now,” he said. “No ships want to venture in this area as we speak, so the situation is really tense. We’ll have to follow and see very closely to see what happens, but currently it is a very important, dire situation.”

• READ MORE: What to know about the Strait of Hormuz, a key passageway essential for global energy supply

A fifth of the world’s oil passes through the strait, carrying oil and natural gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran.

Most of that oil goes to Asia.

Iran’s only remaining oil customer is China.

It has already attacked several ships and threatened any that try to pass through, effectively closing the strait.

“The Strait of Hormuz is closed,” declared Iranian Brig. Gen. Ebrahim Jabbari, an adviser to the paramilitary Revolutionary Guard, vowing that any ships that passed through would be set on fire.

“Insurance fees have gone through the roof in terms of ensuring cargoes with crude that go through the Strait of Hormuz, so no one wants to venture there as we speak,” said Montreuil. “It’s a very important choke point on the planet for crude oil and natural gas. As we speak this morning, Qatar, [which] produces 20 per cent of the liquefied natural gas, is completely shut down. No natural gas is flowing out of Qatar.”

The public police think tank, Montreal Economic Institute (MEI), said the uncertain situation in the Middle East is solidifying Quebec’s advantage in supplying liquified natural gas.

A report in February from analyst Gabriel Giguère argued that Quebec’s Marinvest project in Baie-Comeau could help supply Europe, already trying to wean itself off Russian supply, and meet some of the greater global demand.

“Whether through the development of LNG to Europe or through better access to Asian markets for our oil, Canada has to stop limiting its energy potential,” said Giguère. “In a world rife with geopolitical instability, we need to get out of our own way and finally give ourselves the means to export our energy where it’s needed.”

Quebec and Eastern Canada

Montreuil said that the Middle East conflict should not affect Canada and the U.S.’s volume of crude, but that discussions about supply will arise, particularly in Quebec and Atlantic Canada.

“As we know, Canada is a large producer of crude, but unfortunately, eastern Canada is not connected completely with western Canada,” he said. “The largest refinery in Canada is in Saint John, New Brunswick, and there’s no pipeline to bring crude from western Canada to Saint John, so we are vulnerable in eastern Canada with a lack of full access to western crude.”

Discussions about a pipeline through Quebec arose in recent years in the National Assembly, with opposition parties Québec Solidaire (QS) and the Parti Québécois (PQ) opposed.

The Liberal Party (PLQ) and governing Coalition Avenir Québec (CAQ) both voted against a motion in February opposing a pipeline plan.