While Quebecers have had a bit of a breather since gas prices peaked at $2.21 a liter in June, the recent surge is not slowing down.
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In Montreal, a regular liter was selling for an average of $1.59 at the end of September. According to the Régie de l’énergie du Québec, yesterday it averaged $1.85.
“And in January it’s going to be $2.30 a liter in Quebec,” predicts Dan McTeague, a gasoline price analyst who’s been on the topic since 1994.
A “perfect storm”
It is currently the calm before the proverbial storm.
“And the storm will be perfect,” adds the industry veteran, whose website is called Le sorcier du gaz (Gaz Sorcerers), because his predictions are never wrong.
OPEC+ has already started cutting production by at least 1 million barrels a day. The US strategic reserve, at its lowest level since 1982, needs to be replenished.
And winter is coming.
The cold weather will put downward pressure on the price of fuel oil, which is used to heat buildings, and by extension, diesel from which it is derived.
“You haven’t seen anything with diesel prices,” says Dan McTeague. Due to high demand, he predicts the price will rise to $3 per liter by March.
Diesel currently sells for an average of $2.61 per liter in Montreal.
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Many factors
Many economic and geopolitical factors explain the upheaval in the oil sector, argues Yvan Cliche, an energy researcher at the University of Montreal’s Center for International Studies and Research (CÉRIUM).
Yes, OPEC+ countries, including Saudi Arabia and Russia, will reduce their supply to the market to push up prices.
“They want to avoid a situation like 2008, where the price per barrel went from $100 to $40 in a few months,” explains the researcher.
As OPEC+ member countries fear a global recession, they also have a will not to find themselves in overproduction like they did in 2020 at the start of the pandemic.
At that time, the price of a barrel of oil fell into negative territory for the first time.
willingness to tease Biden
Photo: AFP
Joe Biden, President of the United States.
In addition, on December 5, Europe’s embargo on Russian oil will come into effect.
“OPEC+ is responding by withdrawing oil from the market to positively impact western oil purchases,” says Mr. Cliche.
It is reasonable for the researcher to believe that the “timing” of this gesture is not irrelevant given that the United States is less than a week from midterm elections.
“They want to annoy President Biden, who has a tepid relationship with the Russian regime,” says the expert, adding that the popularity of a president, and thus of his party, is often linked to the price of gas at the pump.
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