Gas prices expected to keep rising amid Middle East conflict

CTV News

4 hours ago

Calgarians are noticing the cost of fuelling up vehicles increased this week, and gas prices are expected to rise further due to growing tension in the Middle East.
Calgarians are noticing the cost of fuelling up vehicles increased this week, and gas prices are expected to rise further due to growing tension in the Middle East.
The average price of gas in Calgary is $1.31, according to GasBuddy data, up compared to $1.28 last week when Iran and Israel began launching attacks at each other.
'It is possible that over the next week or two gas prices could go up anywhere from about 5 to 10 cents a litre,' said Patrick De Haan, petroleum analyst at GasBuddy.
'We had already seen oil prices going up prior to the Middle East tension because of the optimism over the U.S.-China trade deal. … And then last Friday, after Israel attacked Iran (and) we've seen the price of oil jumping even more considerably, and that is set to push gas prices and diesel prices up significantly in the days ahead.'
Middle East tension elevates the risk there could be an impact on the amount of oil shipped from the area or produced by Iran, so companies try to brace by stockpiling oil, which drives up prices.
'When you know it's going to be a rainy day, you don't wait for it to rain to get an umbrella; you leave with an umbrella. That's essentially what the energy markets are doing here; they're bracing for the unknown,' De Haan said.
'They're preparing, and they want to buy more now at a lower price, but that inherently increases demand immediately and sends prices higher.'
Trade war uncertainty is having an impact on energy, too—in many cases the opposite effect.
In the spring, many economists predicted tariffs could lead to a global recession.
When the economy is down, people tend to spend less, including on fuel, so oil companies moved to lower prices in anticipation of a potential drop in demand.
'When the economy is better and stronger, it means more consumption; people are feeling better and they hit the road,' De Haan said.
Energy companies also make moves to prepare for the busy summer travel season, building up their supply to meet the typical spike in demand.
Experts say this usually means a gas price spike in the spring, which tapers off in the summer.
'If we see escalation in the Middle East, prices will likely recede again, and they may go up later in the summer if there are hurricanes or refining disruptions, but those are the absolute uncertainties we just don't know about,' De Haan said.