Gas prices: Bank of Canada rate cut to raise demand and prices, analyst says
Don't get fooled by the arrival of colder weather. He says the switch to cheaper winter gas has been priced in since mid-August.
Bank of Canada Rate Cut May Push Gas Prices Higher, Expert Warns
An industry expert has suggested that the recent rate cut by the Bank of Canada could drive gas prices up. Roger McKnight, chief petroleum analyst at En-Pro, explained in a blog post on Thursday that the drop in interest rates may boost demand for fuel.
"The interest rate drop... sounds like good news, but this will increase demand for gas as more drivers will hit the road," McKnight wrote. "Higher demand translates into higher gas prices."
While cooler weather typically brings lower fuel costs, McKnight noted that the shift to winter gas has already been factored into prices since mid-August.
Gas Prices: Changes Across Canada
According to data from Kalibrate, the average price for a litre of regular gasoline in Canada dropped by one cent between October 17 and October 24. However, gas prices fluctuated significantly across different regions. Abbotsford, B.C., and North Bay, Ont., saw the largest price reductions, with double-digit drops. Gatineau, Que., recorded the most significant increase, adding 6.4 cents per litre.
Weekly Gas Price Updates
Below are recent gas prices across major Canadian cities, measured in CAD cents:
| Location | Oct. 17 | Oct. 24 | Change |
|---|---|---|---|
| Canada Average (V) | 156 | 155 | -1 |
| Vancouver* | 178.5 | 175.9 | -2.6 |
| Abbotsford | 172.7 | 159.7 | -13 |
| Calgary* | 146.7 | 141.9 | -4.8 |
| North Bay | 159.8 | 147.5 | -12.3 |
| Gatineau | 141.5 | 147.9 | +6.4 |
| Toronto* | 152.6 | 153.6 | +1 |
| Winnipeg* | 138 | 129.9 | -8.1 |
| Sudbury | 156.5 | 149.4 | -7.1 |
(*Denotes key urban markets.)
Cities such as Edmonton and Kingston saw noticeable drops of 7.7 and 7.9 cents per litre, respectively. In contrast, Toronto and surrounding areas recorded minor increases.
Regional Trends
Gas prices also varied across smaller communities. North York, Mississauga, and Scarborough experienced modest increases, while areas like Sarnia and Drummondville saw declines.
McKnight's analysis aligns with the latest trends showing that while some areas benefit from lower prices, others may experience short-term spikes due to the increased demand triggered by lower borrowing costs.
