Gas prices in Toronto and the Greater Toronto Area (GTA) are set to increase once again. They are projected to climb to 173.9 cents per litre, potentially the highest levels since April 2024. This rise is largely attributed to soaring geopolitical risks in the Middle East, especially the current war with Iran. According to experts, prices will likely not go back to their former highs even if the fighting stops immediately.
First, a series of missile attacks by the United States & Israel on Iran have set off widespread gas price spikes. Instead, their fuel costs have been gradually increasing. Then the Russia-Ukraine conflict completely shook the energy market, making analysts wary of any oil supply’s stability. Roger McKnight, chief petroleum analyst at En-Pro, observed that this is the first time it’s not going global and it is changing the global dynamics of oil.
“The changes at the pump are not following any of the rules used by the oil companies in the past.” – Roger McKnight
Gas prices used to react to changes in the wholesale market with a 24-hour lag, but that’s all changed. McKnight pointed out that now, prices are going in a different direction than history would suggest, making it hard to forecast for consumers—and businesses—at the same time.
In addition to geopolitical tensions, several factors are exacerbating this global increase in gas prices. The switch to costlier summer gasoline is pushing the price spike. Supply worries are already mounting as Iran threatens to blockade and even sink crude shipments in the strategic Strait of Hormuz, where over 20 percent of the globe’s crude flows through.
Warren Mabee, an expert in clean energy policy, reviewed the complexities of the existing landscape. These economic and political complexities may result in years of high fuel prices. He stated that it will take “at least a few months for this to work its way through the system before prices start to return to something closer to the pre-conflict pricing.”
“When you get into these types of situations where we actually have a constraint on supply that is affecting everybody, it can result in much higher prices much faster.” – Warren Mabee
On April 1, 2024, the federal government increased the carbon tax. This tax hike put roughly 3.3 cents per litre onto the cost of gasoline in every corner of Canada. Geopolitically speaking, Canada has a healthy oil industry. Yet, the country is part of a global market that is highly susceptible to international events, exposing domestic prices to sudden shifts in supply and demand.
Gas pump in Toronto and the Greater Toronto Area (GTA) on April 13, 2024. They reached an unbelievable 178.9 cents per litre! Consumers are bracing for the new increase in prices. What’s less clear is how long these high costs are here to stay or when relief will ever arrive.
