As the first week of November carries on, the price of gas in the Energy City continues to make an ascent.
Rising to 104.9 cents per liter on Wednesday, it gained momentum and rocketed to 116.9 by late Friday morning in Estevan. This was an overnight jump of 12 cents, and up 16 from the previous week. Province wide, the numbers had a bit smaller margin, as the overnight shift was only 2.2 cents. However, it is a 11.2 increase from last week. Other areas of Western Canada saw even higher figures.
So what is the root of the change this time, the fuel in the afterburner of the price increase? According to Dan McTeague of GasBuddy.com, the secret lies in the Chicago Spot gasoline market, upon which western Canada relies and bases upon almost exclusively. It shot up 60 cents per gallon within the span of a week and a half. This was due to a gas pipeline that ruptured and was leaking down south, while at the same time several refineries were going through maintenance after Hurricane Harvey. Other refineries were also offline, resulting in a huge drop in production. The subsequent decrease in supply triggered the inevitible jump in demand and price. It's costing gas station owners more to aquire their inventory, thus many are throwing in the towel and nudging their prices as well. While the pipeline is now repaired, back up and running, 650,000 barrels were lost while it was down, and U.S. Midwest inventories lost 1,000,000 barrels of gasoline last week.
How much and how fast things come back down depends on how quickly retailers will be able to get rid of their more expensive inventory. This, in turn, could take longer as consumers won't be overly enthusiastic about the higher cost.
While OPEC isn't directly connected with the price that you see on the sign as you drive by, they have been making grounds in their commitment to reduce the global overhang of oil, and potentially extending production cuts into 2018. The result of this means a dwindling supply of oil, and thus a rise in the price of oil. This may keep the gas price a bit higher, despite the two being seperate markets.