When you think there’s no more meat on the bone well then, it may be true, there’s no more meat on the bone.
If you thought that gasoline and diesel prices had reached their “apeximy” (my word), then go to the back of the class because prices continued to increase this past week in parts of the country, due to a formulation change as insisted upon by the “environmental assembly” – with no objection from our obedient politicians.
I am referring to the magical transition from winter gasoline to summer gasoline, which, with lack of a drum roll, increased wholesale, and retail prices by 7 cents per litre (cpl). This change in formula and boost in prices is due to various levels of governments insisting that something be done to slow down or prevent gasoline evaporating when being pumped into your tank during the warm summer months.
This was first introduced in the high automotive populations of New York, Chicago, and Los Angeles to cut down on the risk of smog. This then became a favourite political party balloon forcing the oil industry to refine their crude in a different fashion with more exotic and expensive additives.
So here we are.
Well, not all of us because in this country, yes prices increased by 7 (cpl), but for some reason this was only applied to prices in the Maritimes, Quebec, Ontario, and Lower Mainland B.C.
With parts of the Prairies receiving 50 cms of snow this past week, it would have stretched the realms of credibility to apply a 7-cent increase because… don’t you know it’s summer, not winter gas that you need?
Summer is nearly upon us, so out with the cold low winter temperatures and prices and in with the high and hot summer prices.
If all this were not enough, the consumer may be in for an even rougher road ahead. It won’t be because of a supply/demand problem for gasoline. In fact, demand for gasoline is dropping due to price fatigue.
The immediate problem for the gasoline consumer is the extreme shortage of diesel. Normally demand for diesel drops off with the passing of the winter heating season. However, the pandemic has increased industrial activity and consumer spending increased demand for heavy transportation fuels. The Russian invasion of Ukraine has cut back on Russian diesel supply to Europe – and this means a huge increase in U.S. diesel exports.
With diesel pump prices 64% higher than a year ago, U.S. refiners are financially encouraged to delay the switch to refining crudes with a high gasoline yield but continue to process paraffinic crudes with a high diesel yield.
This will then lower gasoline inventories and increase prices.
Go ahead and chew that bone! That is if you can afford one!
– Roger McKnight – B.Sc., Senior Petroleum Analyst
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