TORONTO - A car trip across Central Canada is set to become a lot more expensive with pump prices expected to hit their highest levels since the recession in an area spanning Quebec City to Windsor, Ont.
Gas price watchers are predicting as much as a 4.5 cent per litre spike in gasoline prices Wednesday at stations in southern Ontario and Quebec.
Prices are expected to hit 140.1 cents per litre in Toronto, eight per cent higher than at this time last year even though crude oil prices were higher a year ago.
The website Tomorrow's Gas Price Today predicts the most drastic price changes for the Greater Toronto Area, with prices in Ottawa up about three cents a litre, but unchanged in Montreal and Vancouver —where prices are already high.
If the changes do occur, it could send national prices up to 142 cents per litre.
"TGPT has learned that the industry's line for (the) increase is due to the conversion from winter to summer gas," said the website founded by former Liberal member of Parliament and gas price watcher Dan McTeague.
"This is a lame and well-worn excuse. The fact is that fuel specs in Canada, unlike the US, don't change with the season."
While prices across the country vary widely due to various provincial and territorial tax regimes, prices in southern Ontario could hit record highs between 143 to 147 cents by end of this month, said analyst Roger McKnight of Oshawa-based En-Pro International Inc.
"It's going to hit and stick" McKnight said.
"Prices increased nine of the last 10 years in March and April but this year they started in January and they are continuing to roll."
Gas prices usually rise in the spring as refineries shut down to convert from producing diesel to gasoline as the summer driving and vacation months approach.
But this year, a shutdown of four refineries in Pennsylvania as well as five more in Europe has severely cut North American supplies, McKnight said.
The price hikes could also be due to a confluence of other factors, mostly geopolitical events outside of Canada's borders as domestic prices tend to follow those in the U.S. closely.
The reasons for the rising price of gasoline vary — ranging from higher crude prices on the back of a falling U.S. dollar to refinery supplies, seasonal demand and Middle Eastern political instability. Speculation in wholesale markets can also be a factor.
The threat of oil shortages as a result of a potential escalation of a conflict between the U.S. and oil-rich Iran is another contributing factor this year.
But while oil prices are high, they have fallen off recent highs and there doesn't appear to be enough tightness in supply to raise prices so quickly, noted David Detomasi, an assistant professor of international business at Queen's University.
"It's pretty shocking and pretty severe and largely inexplicable ... it seems like something the gas providers feel they can get away with," he said of Wednesday's projected increases.
"The global economy is starting to recover but its not in full swing yet. It's not as if we have a huge amount of constriction in the supply and demand market which may explain some of this."
McKnight also bets that prices wouldn't be so high if it were not for the delay in the U.S. process to approve TransCanada's (TSX:TRP) Keystone XL pipeline that would help ease a bottleneck of supply in the U.S. Midwest.
And while prices are slightly cheaper for those in the oil-rich Prairie provinces — averaging 110.8 cents a litre in Edmonton on Tuesday — the relief at the pumps there is more a result of lower taxes than a break on prices, he added.
"Prices are determined by the world market. It's not determined by people sitting in Calgary or Edmonton," he said.
Last May, when drastic swings in pump prices in a matter of weeks infuriated drivers across Canada, politicians were quick to tap into that anger.
Tony Clement, when he was still industry minister, said he'd invite the companies responsible for setting gasoline prices to a Commons committee in Ottawa to explain the soaring costs.
Gas prices soon fell again and faded from headlines, but experts expect them to be at the top of consumers' minds again this spring as they reach new highs.