Gas prices in Victoria surpassed $2 per litre today, after several day of the price at the pump hovering at roughly $1.92/L as Gasbuddy data suggested steady rise in the average price across Canada. Some drivers in the capital region felt the jolt first-hand today when they encountered gas stations listing as high of prices as $2.10/L.
Why is this happening now?
Gasbuddy head petroleum analyst Patrick De Hann has made regular appearances on CFAX 1070 to discuss the oil market situation since the U.S. and Israel’s war with Iran began. He initially said Victoria was a bit ahead of the game on prices rising, because the capital region typically sees gas prices balloon around this time each year as spring approaches. However, he added the global market pressure would eventually reach the area so long as the Strait of Hormuz remained closed for business. It appears Victoria is now starting to experience it directly at the pump.
In light of the market pressures linked to the recent conflict in the middle east, De Hann told CFAX 1070 on Tuesday (March 17) there is really no way to avoid the situation.
He suggested Canada being a major oil producer can be a lifeline in some areas, but the Strait of Hormuz remaining effectively closed due to the U.S.-Israel war with Iran creates economic danger for the whole world—including North American supply chains and air travel.
“You can’t really insulate yourself from the global price of oil,” he said, with the caveat that provinces like Alberta are benefiting from more direct access to oil supply.
Don’t drive? Your pocketbook may suffer anyways as businesses pass costs on to consumers
Meanwhile, diesel prices in B.C. have been soaring for weeks, with local agricultural and courier businesses feeling the sticker shock ahead of today’s gas price spike. As of today (March 18), Gasbuddy data shows diesel prices in Saanich as high as $2.33/L.
Locally, CFAX 1070 has heard business concerns firsthand.
Terry Michell, who co-owns Michell’s Farm, told CFAX 1070’s Steve Young that most farm equipment relies on diesel—an unexpected increase to operating costs which farming businesses will eventually need to be passed on to the consumer.
“Everything is going to be effected, we already had emails from our packaging suppliers, our carton suppliers [and] basically down the line everything is going to have an increase of some kind,” Michell said.
He’s also watching fertilizer prices increase with concern, although the early spring season means many lower Vancouver Island farmers bought theirs before that product started to see significant price increases linked with the Iran war. Michell said he worries fertilizer prices will be particularly slow to go down in the long run, in part because many fertilizer inputs get transported all over the world before being blended in Canada.
Michell said there is no doubt his prices will have to go up this year, although he hopes being a local farm means they don’t have to raise prices as much as non-local produce could rise, because their transportation costs are minimal when compared to nationally or internationally imported goods.
As early as last week (March 13) a local courier with diesel, gas and electric vehicles, which also operates on the lower mainland was monitoring in anticipation of raising fuel surcharges. Maximum Express Courrier and Freight owner Al Hashem told CFAX 1070’s Ryan Price the fuel surcharge is currently at 24 per cent as of March, and the company typically bases the surcharge on the previous month’s price of fuel.
“That means we are absorbing the cost of about 10 per cent. How long can we last doing that? Not too long.”
This comes as the Canadian Federation of Independent Business tracks a larger trend of concern from the small business community in B.C., with a recent survey suggesting 89 per cent of small businesses want to see levels of government prioritize increasing energy production.