Free-flowing refineries are prompting a “bloodbath” for retail gasoline prices in Edmonton, one analyst says.
BY THE NUMBERS
– Cheapest price of gasoline in Edmonton: 57.9 cents
– Average price of gasoline in Edmonton: 61.4 cents
– Average cost of gasoline in Alberta: 67.8 cents
– Average price of gasoline in Bc: 95.3 cents
– Average national price: 85.0 cents
– Highest price of gasoline in Canada: 122.7 cents, Fort Smith Region County, N. W. T
(by Tuesday, Feb. 9, 2016 in cents per litre)
With Edmonton gas prices averaging 61 cents per litre Tuesday, GasBuddy.com petroleum analyst Dan McTeague said prices haven’t been this lower in the city since Dec. 2003 and therefore are prone to sink reduced. Some stations were at 59.9 cents per litre.
McTeague said prices in Alberta are expected to fall 4 to 6 cents by Friday to sit down around 56 cents per litre over the past weekend.
“If you feel they are good prices, just wait. The roller-coaster hasn’t hit the bottom yet,” he explained in an interview from Toronto.
“If I’m looking at Edmonton, fundamental essentials best money saving deals in the united states, bar none.”
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Gasoline costs are heavily tied to the price of oil, which fell Tuesday to levels not observed in almost 13 years, dragging on the Toronto Stock Exchange two per cent as investors grow increasingly concerned there’s an excessive amount of crude around the world markets.
The March contract for North American benchmark crude fell US$1.75 to US$27.94 per barrel – a drop of nearly six percent.
Kash Pashootan, a portfolio manager at First Avenue Advisory, said the oversupply issue won’t be resolved until there are closures in the West, where crude is more epensive to produce than Saudi Arabia.
“We should ‘t be surprised to see oil continue to go down until we have seen supply erode or decline, which hasn’t happened yet.”
Petroleum refineries are finally beginning to make the most of low oil prices, McTeague said, resulting in an “exceptional” rate of production that’s likely to drive wholesale prices down for an extended time.
“No one’s blinking. They’re all producing, they’re all over-producing and we’re still a good ways away from Easter long weekend.”
The low wholesale costs are also fuelling competition in the retail level, said McTeague, especially in Western Canada, where stations are selling at razor-thin profit margins to try to move as much gasoline to consumers as you possibly can.
“For retailers, it’s simply a bloodbath … Your retail margins are gone. Kaput. It’s all about volume.”
McTeague called the situation “bittersweet” for motorists struggling with the economical downturn but glad for many relief in the pumps.
“A minimum of people are getting one benefit from low crude, finally. Gasoline is not following crude whatsoever before the last couple of weeks so it’s a welcome turn of events.”
