Gas prices expected to go up again as war in Ukraine leads to market volatility

A remarkable jump in fuel prices Friday is causing pain at the pumps for people in every Maritime province.

"Sometimes when the prices get this high, you think about the places you want to go — and the places you can actually go,” said Al Birthwright while filling up his tank in Halifax.

In New Brunswick, the price of regular self-serve leaped eight cents a litre to a maximum price of 171.8 cents. Diesel went up too; the current maximum price is now 191.3.

In Nova Scotia’s zone one, regular self-serve jumped more than 10 cents, now selling at a minimum of 166.6 cents per litre. Diesel in the Halifax area also went up to a minimum price of 183.7 cents.

On P.E.I., the maximum price of gas has soared to 172.7 per litre for regular self-serve, and diesel is selling at a minimum of 166.6.

The Nova Scotia Utility and Review Board (NSUARB) will invoke its interrupter clause Friday night, to adjust the price of gasoline to reflect price shifts in the global oil market.

The interrupter clause is a mechanism available to utility boards to respond to sudden and significant spikes, up or down, in petroleum product prices.

The clause was already used in Nova Scotia and New Brunswick this week to increase gas prices.

All three Maritime provinces have gas regulators which set prices at the pumps with unique formulas for each province.

In Nova Scotia, the NSUARB sets prices every Thursday and uses a formula based on current pricing in the New York Mercantile Exchange.

"We pay attention to the daily price and then we convert it from American to Canadian dollars, and that becomes the basis for our price setting here,” said NSUARB executive director Paul Allen.

Dan McTeague, with Canadians for Affordable Energy, says he expects the price of gas in the region to go up 11 cents overnight, with diesel up 14 cents.

“If you didn’t move yesterday, you’re going to want to move today to take advantage of that before the price kicks in,” said McTeague.

Gas pricing expert Vijay Muralidharan, senior consultant at Kalibrate Canada, says the Russian war on Ukraine is contributing to skyrocketing gas prices.

“Russia produces 10 to 12 per cent of the global crude demand and they export over four million barrels of crude,” said Muralidharan. “We have learned from other sources that that four million has fallen down by 1.5 million barrels."

He says that’s a major hit to the global supply of crude oil.

Canada imports almost no crude oil from Russia but the prices are reflective of global supply.

With Russian exports tumbling due to the war and economic sanctions, it means countries are now competing with each other, and looking for new supply partners — driving up the price of oil.

"You are looking at 60 to 70 per cent appreciation of crude out of nowhere,” said Muralidharan.

The increase in the price on the average barrel of oil means not only getting pinched at the pump but on your home heating bill too.

Nova Scotia NDP leader Gary Burrill says the PC government needs to act and increase the Heating Assistance Rebate Program.

"Right now under the total of the government assistance program with home heating oil, a person can't receive any more than $600,” said Burrill. “Well, what's that, half a tank?"

He’s calling on the province to review the Heating Assistance Rebate Program, saying it was suitable for another time but needs updating.

With all the uncertainty in the oil market, its anticipated prices will continue to rise in the near future, says Muralidharan.

"If this war continues, this high pricing is here to stay.”

McTeague says the federal government could give energy rebates to Canadians.

“Ottawa can do something about it. It makes no sense for any government to be seen as profiting from these extraordinary price hikes, which are precedent setting as far as how quickly they’ve gone up.”