'The Hurricane Harvey effect:' storm behind gas price hikes

Posted September 02, 2017

Major gasoline refineries in the USA were shut down by Harvey, which also caused the temporary shutdown of the Colonial Pipeline - what McTeague calls the "aortic artery" of gasoline transportation for the US Atlantic Coast.

Consumers in Ontario are expected to be paying nine cents more per litre on Saturday, taking the average price in Toronto to $1.32 per litre.

It could always be worse, however - McTeague said prices rose in Ontario and Quebec by 20 cents a litre across the board.

IHS Markit said in a report Friday about 3.6 million barrels per day of Gulf Coast refining capacity or 20 per cent of the USA total is off-line, with a further 1.8 million bpd or 10 per cent operating at reduced rates.

These prices are set to hold at the pumps at least until Thursday, said McTeague.

Gas prices in Regina jumped by seven cents a litre earlier this week.

TD Securities analyst Bart Melek said in a note Friday he expects crude oil prices to strengthen to above US$50 per barrel before the end of September as Houston refineries, ocean import facilities and pipelines gradually return to normal operations.

McTeague suspects service stations such as those in Montreal will use the wholesale price increase as a pretext to increase their profit margins.

"It's likely we are going to see high, sustained prices as a result of the shortage in the United States", he said. "In Canada, we barely produce enough gasoline to meet our own needs". At the start of the week, prices were about $1.14 a litre.

In Vancouver, McKnight predicted little change on the weekend but McTeague says he expects a five-cent jump on Saturday.

Roger McKnight, senior petroleum analyst with En-Pro International Inc., said he has never seen such a big price increase.