As the temperature begins to rise, so does the price of gas in Saskatchewan. This change as the season in which people tend to drive more begins, is also driven by a number of factors.
Dan McTeague, a petroleum analyst with GasBuddy, said demand is one of the primary reasons the price of gasoline rises in the spring and summer.
鈥淲hen you get into summertime driving, there鈥檚 also a bit of so called volatility, on the gasoline demand side,鈥� he said. 鈥淭his is where it gets into, what some refer to as, the 鈥渟illy season.鈥� Sometimes refineries can keep up with the demand and sometimes they can鈥檛.鈥�
McTeague noted there are a number of factors that play into why drivers are paying as much as they are for gas, and why prices spike as abruptly as they do. The primary influencing force is found in the retail market, in the case of southern Saskatchewan.
鈥淚t depends where you start from. If prices were down in the 82, 84, or 87 cents a liter range, and have just gone up to 92, what you鈥檝e seen is a reflection of the wholesale prices increasing last Thursday,鈥� explained McTeague.
McTeague noted there are factors outside the markets that affect the price of gasoline, saying, 鈥淩etailers usually need about seven or eight cents a liter to turn on their pumps and pay for electricity, honour credit cards and the like.鈥�
McTeauge said the summer tends to be an unpredictable time because Canada is a 鈥減rice taker and not a price maker,鈥� referring to the price of gas being dependent on the fluctuating value of the dollar.
鈥淲e price our oil in U.S. terms. Our prices rely on U.S. demand, which is likely to hit an all-time high this year,鈥� said McTeague, who noted that a lot of oil produced in southern Saskatchewan makes its way to U.S. refineries. 鈥淭his puts a lot of pressure on refineries to put out a product at a certain level, and price. You generally won鈥檛 hear about a refinery in the U.S. going down until the price spikes in Canada.鈥�
Canada sells about 3.4 million barrels of oil to the U.S. every year. The demand for Canadian oil from the Midwest refineries to which it is sold, rises in the summer.
Another factor in the price of gasoline is the way it is created, itself, in the warmer months, compared to in the winter. McTeague said that in the summer months, gasoline is more expensive to produce in refineries. Gasoline being used in the winter doesn鈥檛 require the expensive additives or components added to it in the summer. Those substances are added, in the summer, to prevent the gasoline being used from evaporating due to higher temperature conditions.
McTeague said, 鈥淚n order for oil companies to provide the product they have to add very expensive components. They鈥檙e usually three of four cents a liter.鈥�
