PRICE SHOCK AT THE PUMPS

Gas in Saskatoon still cheaper than other regions

Saskatoon motorists who set out to fill their gas tanks on Thursday got a shocking surprise when they pulled up to the pumps.

Prices had shot up to 116.9 cents per litre at most gas stations — an eight cent jump from the previous day.

Although the city is currently experiencing its highest gas price since June 2016, GasBuddy’s senior petroleum analyst, Dan McTeague, said Saskatoon prices are “significantly low” compared to other Canadian cities — especially those already paying a carbon tax.

Over the past two weeks, Chicago’s spot market — which sets the benchmark price for all wholesale gas in Western Canada — saw prices increase by 60 cents per gallon, thanks in part to both the ruptured Explorer pipeline in the Gulf of Mexico, the closing of two large Midwestern refineries for regular maintenance and record breaking demand from American motorists, McTeague said.

Gas retailers would have known about the price jump on Monday evening, although some decided to continue drawing from their remaining inventory at a lower price for as long as possible before pushing it up to its new higher price, he said, adding that the only reason prices aren’t already higher is because retailers are absorbing a portion of the additional cost.

“I’d hate to be a gasoline station owner in Saskatoon because they are losing their shirt right now,” he said.

Because retailers are currently paying 110.7 for their fuel — which means they are only making a profit of five-and-ahalf cents per litre — any time a customer uses a coupon for an additional discount it cuts into the already small profit margins, he noted.

Unfortunately for drivers, one cost retailers will not absorb is the carbon tax the federal government is set to implement at the start of the new year. Saskatoon drivers should expect a yearly increase of 2.45 cents per litre until 2022, McTeague said.

It may get better before it gets worse. By Friday morning, the Chicago spot market price had decreased by 10 cents per gallon. McTeague said he expects local gas prices will begin to drop by mid-week, although the drop won’t be nearly as dramatic as the climb.