Canadian Press
The Edmonton Sun
September 29, 2004

Toronto: With the price of crude oil continuing its climb to hit a record high of $50 US per barrel this week, Canadian consumers are feeling the pinch at the gas pumps and gearing up for a winter of high heating costs. Analysts said yesterday that prices could keep rising because of a sharp rise in global demand, tight supplies and threats to output in petroleum-producing nations such as Iraq and Nigeria.

Tom Adams, executive director of Energy Probe, a national consumer and environmental research group, expects sales of wood stoves to increase in Eastern Canada this fall as Maritimers dependent on heating oil seek cheaper alternatives.

Also, August’s sales record for the fuel-efficient Honda Civic car in Canada shows how consumers are already opting for more fuel efficient cars that are cheaper to operate.

Analysts note that every $5 a barrel increase in oil prices pushes gasoline prices up by nearly four cents a litre in Canada. And with half the fleet of North American cars made up of gas-guzzling SUVs and similar models, the latest oil price rise is squeezing consumers.

According to Calgary’s MJ Ervin and Associates Inc., the price for a litre of regular gasoline rose by an average of 2.9 cents to 87.2 cents across Canada over the last week, with Yellowknife leading the country at 99.9 cents per litre and Lethbridge selling at the low end – 76.9 cents per litre.

"We typically see gasoline prices decline at this time of year just because the peak driving season is over so the peak demand for gasoline more or less wraps up around Labour Day," said MJ Ervin’s Catherine Hay.

"Because we’re not in the peak demand season, and won’t be again till the spring, we’re somehow being protected from a stronger price hike. But there’s no doubt we’re seeing a little bit of upward movement as a consequence of the higher crude prices."

As a rule of thumb, prices at Canadian pumps increase by a little less than a penny for every $1 US per barrel boost, Hay said.

But, she said, because of the increased demand for gasoline in the summer, prices are still lower than in early June, when the average price for a litre of regular gasoline in Canada peaked at 90.6 cents per litre, and drivers in Gander, Nfld., paid $1.02 cents a litre.