BUSINESS

Gas Prices To Soar This Summer, Say Analysts

07/12/2013 04:23 EDT | Updated 09/11/2013 05:12 EDT
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OTTAWA - Filling up the tank on the way to the cottage or that vacation destination has become more expensive in recent weeks — and prices at the gas pump are about to get worse, market watchers are warning.

Investor thirst for black gold — as opposed to the precious metal — is largely to blame, said Dan McTeague, the former federal MP and gas-price crusader who runs the website tomorrowsgaspricetoday.com.

The price of oil has been spiking as gold prices decline, helping to push gasoline prices higher. The renewed political turmoil in Egypt has also played a role in the climbing price of crude.

The price hikes, which are typical in the summer months that comprise Canada's driving season, often coincide with the vacation plans of millions of Canadians.

On Friday, gas prices jumped by an average of 3.5 per cent in a single day, McTeague said.

"You've got financial money, pension money all being thrown out of gold and going right back into safe havens of either U.S. currency or oil," he said. "That's what's driving this."

Last July, the average price for a litre of regular gasoline in Canada was around $1.23. Now, it's closer to $1.32.

Gasoline inventories in the United States have also been drawn down dramatically over the past two weeks, prompting investors to predict a return to better economic times south of the border.

Indeed, some analysts are predicting a 10 per cent increase in pump prices in the U.S. over the next few weeks, which means even higher prices in Canada, said McTeague.

"Whatever happens in the States, you always have to add five to 10 per cent more (in Canada)," he said. "So, if it's going up by 10 per cent in the states on average, expect it to go up by 15 per cent here."

Motorists in British Columbia are already feeling the pump pinch.

Vancouver pump prices shot up early Friday by 6.9 cents per litre, to an average of more than $1.51. Nova Scotia drivers also saw a hefty increase, with average prices up to $1.37, an increase of 6.1 cents.

Prices have risen more modestly in most of the Prairie provinces, but actually declined overnight Thursday in Manitoba and Newfoundland and Labrador.

McTeague predicted prices in Toronto — the Canadian city with the most vehicles on the road — would increase in the coming days to an average of about $1.37.

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