Many Canadians are crunching the numbers for what their future travels may cost them as Canada Day approaches, including the price of fuel during one of the busiest times of year for tourism.
With fewer trips across the border into the United States reported as the trade war stretches on, many Canadians appear to be keeping their travels domestic this year — especially with more incentives to do so.
The Canada Strong Pass is the newest plan by the federal government to promote tourism within Canada’s borders this summer, and this might mean more demand for fuel to reach some of the destinations included in the pass for activities like camping and day trips to national parks and museums, which have discounted access fees for some through the pass.
With the national average price for regular gasoline in Canada hovering around $1.40 per litre, some may be wondering where the price for consumers is heading in the coming days — especially after days of intensified conflict in the Middle East.
“No one’s got a crystal ball on this, and no one knows exactly what’s going to happen moment to moment,” petroleum analyst Matt McClain at GasBuddy says.
“The reality is right now, we are expecting prices to fall.”
Although this may be good news at the moment, oil markets remain volatile amid geopolitical tensions — so things could potentially change.
What determines how much you pay?
The price consumers pay at gas pumps is set based on many factors.
One of the most crucial is usually the price of raw crude oil, which gets refined into what we use for transportation and many other applications.
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Although large amounts of the oil Canada consumes come from places like Alberta, the price is set globally. For oil that Canada imports to fill gaps in supply, the United States and the Middle East are the most common sources.
In recent weeks, the price of oil spiked as Iran and Israel exchanged attacks, and as anticipation was building about whether the U.S. might get involved.
Soon after the U.S. bombed Iran’s nuclear sites, concerns built about whether Iran would retaliate, with some speculation that it could even involve the Strait of Hormuz — a vital shipping route, especially for oil.
Iran did retaliate, but not by impacting oil shipments.
Instead, Iran attacked U.S. military bases in Qatar, with minimal damage and no reported casualties. In addition, U.S. President Trump claims that Iran and Israel have agreed to the terms of a ceasefire.
The end result of these recent developments was a sense of relief for oil markets and global economies that tensions may subside.
“As with any ongoing conflict, we have multiple routes and avenues that we could possibly start walking or going down at any given moment,” McClain says.
“This is all going to be contingent upon a ceasefire, and as of right now, that ceasefire seems to be holding.”
So for now, Canadians anticipating filling up the gas tank in the coming days and weeks should find some price relief, but a lot will depend on whether cooler heads prevail in the ongoing conflict in the Middle East, which is still a volatile situation for oil markets.
Although this may be good news for the travel outlook, experts advise to budget for higher prices in case things change.
“Plan for the worst and hope for the best. The best thing that people can do is have that budget, and possibly have some extra money that you thought you might be needing for fuel, but you no longer need,” McClain says.
“Whatever the case may be, we are still seeing crude oil prices plummet as well as wholesale gasoline prices — it’s excellent news for the motorists.“
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