Gas prices will remain low, but not that low, says analyst, predicting summer stability
Posted May 21, 2020 7:07 am.
Last Updated May 21, 2020 7:10 am.
VANCOUVER (NEWS 1130) — After a few weeks of incredibly low gas prices, sometimes as low as 0.80 cents per litre around Metro Vancouver, supply and demand have levelled off and so has the cost at the pump, says one analyst.
Michael Ervin is the senior vice president of consulting with the Kent Group, which watches the petroleum market. He says physical distancing and working from home means we just aren’t using the fuel.
He says urban markets in Canada saw a 60 per cent decrease in year-over-year demand in April.
“With that lower demand inventories of gasoline have piled up. Refineries have been continuing to make gasoline not knowing initially what the demand impact would be and we’ve been left with high inventories and that’s caused prices to plummet as we’ve seen,” he explains.
Now, refineries are adjusting their output to be more in line with demand, he says.
“And with that inventory, levels are back to what would be normal levels,” he adds, saying that means wholesale prices have risen since the initial cliff drop precipitated by COVID-19 shutdowns to be more in line with demand.
“That would suggest that we’re not going to see a continued sustained increase in gasoline prices.”
Predicting minor fluctuations, Ervin says prices now are likely close to where he expects them to hover for the summer.
“Summertime, the gas prices tend to remain relatively stable.”
Follow us on Twitter @1130gastracker for the latest prices around the Lower Mainland.
