A gas price watcher is warning that pump prices will rise significantly overnight, up to three cents a litre in parts of the country.
Dan McTeague's website Tomorrow's Gas Prices Today notes the rise would come ahead of the busy long weekend in both Canada and the U.S.
He predicts one of the biggest jumps in prices will come to Kamloops B.C., where he expects prices to rise three cents a litre.
Prices in other Western Canadian cities were expected to see smaller increases but McTeague says gas prices in cities in that region already carry a premium of 10 cents a litre.
His website predicts an overnight hike of 2.8 cents a litre in Toronto and a similar jump in surrounding areas. It also projects a two cent a litre spike in Montreal, a jump of 2.7 cents in Ottawa and one cent in Calgary.
Oil prices have fallen dramatically this year and now hover under $80 a barrel.
The economic situation in Europe, combined with a slowdown in U.S. hiring and a drop in Chinese manufacturing activity, has contributed to the sharp drop in oil prices since the winter.
Benchmark U.S. crude added 15 cents to end Tuesday at US$79.36 per barrel on the New York Mercantile Exchange.
However, analysts note that prices at the pump don't necessarily move in tandem with the global market for crude.
The price at the pump is influenced by numerous other factors, such as wholesale prices for crude oil and, to a lesser extent, markups by retailers.
On a daily basis, retail gas prices do not fall in lockstep with the reported price of crude because oil is typically sold in transactions ahead of time, also known as futures contracts.
Earlier this week, Statistics Canada reported that May's inflation rate fell almost a full point to 1.2 per cent — the lowest since June 2010. The big reason for the drop was gasoline prices, which fell 2.3 per cent from this time last year.
Gasoline prices rose almost 30 per cent in May of 2011 on an annualized basis, before beginning a pullback in June. This year, the peak appears to have occurred in April and the retreat started in May. However, analysts warned earlier this year that the price of gas could still rise this summer.
By province, drivers in British Columbia are paying the most at the pump at an average of 132.32 cents a litre, while oil-rich Alberta commuters are paying the lowest prices at an average of 113.21 cents a litre.
WHAT'S BEHIND THE PRICE OF GAS?
1. Crude Oil Prices
It starts with crude oil. Although Canada may produce more oil than it consumes, the country is at the mercy of global markets for the commodity. Increased Middle East instability, sparked by popular uprisings, has lead to concerns about supply. Better-than-expected economic growth, especially in developing nations such as China and India, has also increased demand. (AP Photo/Hasan Jamali)
2. Refining Oil into Gas
The next link in the supply chain is refining. In order to turn thick, black crude oil into useful products such as gasoline, diesel, heating oil and jet fuel, it must be sent through a mind-boggling array of pipes and tanks, heaters and condensers to sort the components of the substance from lightest to heaviest. This is a complex and costly process, and is paid for by what is known as the "crack spread," or refining margin. This represents the difference between prices fetched for the products produced, and the cost of crude oil inputs.. (AP File Photo)
3. Transportation to Retailers
Once the oil has been refined into gasoline, it must be transported to retail outlets across the country. This is accomplished through a network of 23 terminals - from St. John's to Nanaimo, B.C. -- forming the backbone of the distribution network. (AP Photo/Jessica Hill)
4. Retail Mark-Up
The retail mark-up averaged 7.6 cents per litre in April. This national average masks wide variation, from lows of 4.6 cents in Calgary up to highs of 25.8 cents in Whitehorse, according to Kent Marketing Services, an industry consulting group. (AP Photo/Orlin Wagner)
5.Taxes at the Pump
Emily Corbett of Mechanicville, N.Y., pump gas at a station in Mechanicville, on Wednesday, May 11, 2011. New York, Indiana, Illinois and New Hampshire are among the first states talking about temporarily suspending part or all of the state and local taxes that can add 14 cents to nearly 50 cents to a gallon of gas. (AP Photo/Mike Groll)