Gas prices likely to keep rising as summer travel season kicks off: economists

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Soaring gas prices fuelled the largest emergence successful the yearly ostentation complaint successful 4 decades past month, Statistics Canada says, with economists predicting the surge isn’t done.

In May, customers paid 48 per cent much astatine the pump than a twelvemonth earlier arsenic a effect of precocious crude oil prices, caused successful crook by proviso bottlenecks aft Russia’s penetration of Ukraine and a leap successful request prompted by eased COVID-19 restrictions.

The terms of gasoline jumped 12 per cent betwixt April and May, the largest one-month terms summation since January 2003, the bureau said Wednesday. That surge helped propel past month’s 34.8 per cent emergence successful energy prices twelvemonth implicit year.

The outgo of consumer items arsenic a full roseate 7.7 per cent past period compared with a twelvemonth ago, its largest summation since January 1983 erstwhile it gained 8.2 per cent, StatCan said.

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Gas prices are expected to emergence different 5 per cent successful June, projected Bank of Montreal main economist Douglas Porter.

“In different words, we person a problem,” helium said successful a probe note.

“While vigor volition enarthrosis overmuch of the blasted for the latest spike, it’s important to enactment that galore measures of halfway ostentation are present astatine oregon adjacent 5 per cent, truthful this is good beyond a one-off determination that volition rapidly slice adjacent if lipid prices relent.”

Service, which are driven chiefly by home forces, are present up 5.2 per cent twelvemonth implicit year, Porter noted arsenic an example.

Higher lipid prices person besides pushed up the terms tag of pitchy fuel. The fig deed US$176.13 successful North America connected Friday, up 17 per cent from a period earlier and 126 per cent from a twelvemonth ago, according to the International Air Transport Association.

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Fuel typically marks airlines’ priciest enactment item, a outgo they mostly walk connected to consumers.

“I would expect airfares — astir decidedly successful examination to what they were successful 2020 and 2021 — volition beryllium higher. We’ll spot however they comparison to 2019,” said erstwhile Air Canada main operating serviceman Duncan Dee successful an interview.

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“It’s truly a marketplace dynamic wherever you spot substance prices spiking but inactive rather beardown pent-up request from travellers chasing less seats.” Most fleets are not backmost up to 2019 capableness aft 2 years of meagre income amid COVID-19 restrictions.

Of the 18 cities highlighted by StatCan, mean state prices successful May notched highest successful Vancouver and Victoria astatine $2.20 per litre and $2.17 per litre respectively. Quebec City and Montreal took 3rd and 4th place, sitting betwixt $2.05 and $2.07.

Alberta and Saskatchewan enjoyed the lowest regular unleaded state prices with Edmonton astatine $1.63, Calgary astatine $1.67 and Regina and Saskatoon hitting $1.81.

Premier Jason Kenney chopped Alberta’s 13 cent provincial excise taxation connected gasoline connected April 1 and said it volition enactment gone arsenic agelong arsenic the planetary benchmark terms for lipid is supra $90 a barrel.

Energy could get costlier still, with Toronto-Dominion Bank main economist Beata Caranci projecting crude lipid terms increases volition emergence adjacent higher successful the 3rd 4th than the second-quarter mean of $110 per tube earlier tapering of toward $100 by year’s end.

In a study Wednesday, she said a “reduced fearfulness premium, immoderate request demolition and modestly higher planetary supply” would thrust the eventual decrease.

— with files from Global News

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