While Quebecers have taken a bit of a breather since gas prices peaked at $2.21 a liter in June, the recent surge shows no sign of abating.
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In Montreal, a regular liter sold for an average of $1.59 at the end of September. Yesterday, it averaged $1.85, according to the Régie de l’énergie du Québec.
“And in January it will be $2.30 a liter in Quebec,” predicts Dan McTeague, a gasoline price analyst who has covered the topic since 1994.
“The Perfect Storm”
So at the moment it is the calm before the proverbial storm.
“And the storm will be perfect,” adds a veteran of the area, whose website is called “Le sorcier du gaz” (The Wizard of Gaza) because he is never wrong in his predictions.
OPEC+ has already started cutting production by at least 1 million barrels a day. America’s strategic reserves, which are the lowest since 1982, will need to be replenished.
And winter is coming.
The cold weather will put pressure on the price of fuel oil used to heat buildings and, by extension, on the price of diesel, which it is derived from.
“You haven’t seen anything with the price of diesel before,” says Dan McTeague. Due to high demand, he predicts it will rise to $3 a liter by March.
Diesel currently sells for an average of $2.61 per liter in Montreal.
Many economic and geopolitical factors explain the upheaval in the oil sector, says Yvan Cliche, an energy researcher at the Center for International Studies and Research at the University of Montreal (CÉRIUM).
Yes, OPEC+ countries, including Saudi Arabia and Russia, will cut their supply to the market in an attempt to drive prices up.
“They want to avoid a situation like in 2008, when the price per barrel rose from $100 to $40 in a few months,” explains the researcher.
As OPEC+ member countries fear a global recession, they also have the will not to find themselves in overproduction, as they were in 2020, at the start of the pandemic.
At that time, the price of a barrel of oil fell into negative values for the first time.
Willingness to upset Biden
Photo by AFP
Joe Biden, President of the United States of America.
Otherwise, there is also the fact that the European embargo on Russian oil will enter into force on December 5.
“OPEC+ is responding by pulling oil off the market to have an upward impact on Western oil purchases,” says Mr Cliche.
It is reasonable for the researcher to believe that the “timing” of this gesture is not without significance, with the mid-term elections in the United States in less than a week.
“They want to upset President Biden, who has lukewarm relations with the Russian regime,” says the expert, who adds that the popularity of the president, and by extension his party, is often linked to the price of gasoline at the pump.