By Isabella Diez
Gasoline prices are expected to skyrocket with no estimate of how high or for how long.
Current gas prices have not been this high since before the pandemic. When the pandemic first hit, Canadians rarely left their homes which resulted in demand for gas to decline and prices dropping. April 2020 saw the average gas price to be lower than 78 cents. But now gas prices are rising with expectations that this will continue into the upcoming summer months.
These predictions have been made based on a number of factors. Mirroring the trend of gas prices, crude oil prices declined as well in 2020. The demand for crude oil being very low led to an excess amount of supply. Record high levels of 535.2 million barrels of crude oil in the US were reached in May 2020, and consequently, the production of oil was cut. The combination of the lack of demand for gas in addition to the oversupply of crude oil led to record low gas fuel prices in April of 2020. With a slow recovery of the economy, beginning demand for oil and gas started to increase and oil prices begin to rise.
Another factor that has contributed to the surge in gas prices is Trudeau’s plan to increase the carbon tax by 566% which was announced last December. The current carbon tax of $30 per tonne will be raised to $170 per tonne by 2030. This plan entitled A Healthy Environment and A Healthy Economy is aiming to exceed the 2030 emissions reduction goal of the Paris Agreement. Trudeau’s plan includes billions in future government spending for new green vehicles and infrastructure. As well, the plan involves modifications to the Clean Fuel Standard which are expected to begin at the end of 2021. The carbon tax will not only bring about an increase in the price of gas but the price for all goods and services, as well.
The continuous rollout of vaccines has ignited a sense of optimism. Canadians are hopeful that they will soon be returning to their normal lives. The expected increase in travel in the spring and summer most likely will contribute to the growing prices of fuel. As the economy recovers and Canadians begin to drive and travel more, the price of gas will continue to increase.
With prices rising fast and not expected to decline in the near future, it will be a while before fuel prices return to pre-Covid levels.